Local real estate market improving after 2007 slowdown

McALLEN - No one can convince Nathan Selzer the Upper Rio Grande Valley is a soft real estate market.

During his recent round of house hunting, a competing bidder on a property in North McAllen snatched away his "perfect home" with a cash offer.

And about a month ago he made an offer for another home he liked the same day it was first listed. The offer was accepted, but he's still crossing his fingers that the North McAllen home will become his in the coming weeks it takes to finalize the paperwork.

"People would say it's a declining market, but we didn't see a declining market," said Selzer, a 33-year-old who works for a labor union. "The sellers refused to take the sign down because they received so many calls on the first day."

Despite fluctuating prices and reports of a declining market, the Valley's housing market began to emerge from a nine-month slowdown during the first quarter of 2008.

Hidalgo County registered 562 home sales during the first quarter of the year, down just a few from the same period in 2007, according to the Real Estate Center at Texas A&M University. The first three months of this year were the second strongest first quarter on record.

Mortgage market problems and oversupply of new homes significantly hurt sales during the last nine months of 2007, but real estate agents and homeowners are crossing their fingers and hoping the worst is over.

"The Valley appears to be adjusting to get back to a normal market," said Randall Allsup, director of the Rio Grande Valley and San Antonio markets for real estate analysis company Metrostudy.

"The market had been oversupplied and it appears that builders have pulled back. The fundamentals of the Valley are still strong with job growth and migration."

Real estate agents say homes are starting to sell at a normal pace again and more buyers are looking.

"A lot of people are interested in homes," said Mary Hausenfluck, an agent with Trendsetters Realty. "It's not as good as it was before (2007), but it's getting better."

In Selzer's experience, finding a home in the popular North McAllen area was tricky. He said many homes would only stay on the market for one or two days.

"I really expected to find more of a buyer's market from everything we hear," he said, referring to nationwide reports of real estate woes.

Despite the local housing market's recent resurgence, ongoing problems with national mortgage markets and local oversupply means it likely won't soon return to the halcyon days of 2005 and 2006.

The average sale price for homes in the area took a hit during the first quarter of this year, falling nearly $20,000 from the fourth quarter of 2007.

Some of that can be attributed to home sellers lowering prices. However, the large number of low-end homes being purchased is probably a bigger factor, said Roxanne Rydell, a real estate agent with Celebrity Realtors and president of the Greater McAllen Association of Realtors.

The median sale price for a home in Hidalgo County was $89,400 in March, the lowest since April 2004.

There is currently a 14.4-month supply of homes on the local market, which is extremely high for any market, according to Metrostudy's Allsup. Also, the Valley's large number of low-income residents means the tightening of the lending market is hurting this area more than most.

But many people are looking at the positives of January, February and March as a sign that the market is improving.

"As of March 1, it was like someone just turned a key on and buyer confidence is improving," Rydell said.
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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.