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How Is The El Paso Housing Market For Real Estate Investment?

El Paso Real Estate Market Insight

If you are looking at buying a house in El Paso as a potential investment opportunity, you must read till the end. El Paso, Texas is the westernmost city in the state. The city itself is home to nearly 700,000 people, while the metropolitan area is home to approximately 900,000. Its economy is closely tied to Ciudad Juarez just across the Rio Grande in Mexico. The city isn’t getting as much attention as “hot” markets like Dallas or Austin, but is a strong, growing market in its own right. Let’s discuss top ten reasons to invest in the El Paso real estate market. But, before that, we shall take a look at some of the real estate market data and trends in El Paso, Texas.

El Paso real estate market was ranked at 4th in Trulia’s hottest real estate markets to watch in 2018. El Paso’s strong job growth, affordability, low vacancy rates and high population of young household were pivotal in the ranking process. El Paso is a great place to live for those who like the outdoors. The metro area’s proximity to the Rio Grande provides opportunities to whitewater raft, canoe and fish, while Franklin Mountains State Park and Hueco Tanks State Park are great hiking and rock climbing spots. El Paso boasts one of the lowest crime rates in the United States. The city’s stable economy is aided by its diversified business base and strong military presence.

El Paso Real Estate Market

Original Photo via Pixabay

El Paso vs Houston and Dallas Real Estate Markets

Texas has a broad range of real estate markets throughout the state. Houston has been a magnet for immigrants (from abroad and from other states) partly because of inexpensive housing while the local economy in Dallas remains strong because it provides business services and financing for the much larger part of the Texas economy that has nothing to do with oil.

  • Overall, Houston, TX is 20.2% more expensive than El Paso, Texas (Data by Bestplaces.net)
  • Median Home Cost is the biggest factor in the cost of living difference
  • Median Home Cost is 43% more expensive in Houston
  • Household income in Houston, is 8% more than it is in El Paso and 17% below the National Average (Data by Bestplaces.net).

Most of the big Texas cities, including Dallas, Houston, Austin and San Antonio, have boomed since 2011, adding thousands to their populations and seeing their home prices rise substantially. El Paso home price appreciation has been gradual since 2011, though to be fair, the city was largely impervious to the massive price drops that plagued most of the country in 2008. Relative to Texas, El Paso’s latest annual appreciation rate is lower than 80% of the other cities and towns in Texas.

Last year, El Paso was ranked among the best places to live, coming at No. 76 out of 100 metro areas, according to U.S. News and World Report rankings for 2017. The study was based on quality of life, job market, value of living and people’s desire to live. El Paso was also ranked first in a study listing cities where people can live comfortably for less than $60,000 a year, according to Forbes.com.

The cost of living in El Paso is lower than the national average, while the cost of housing is well below that of other major metropolitan areas, including Houston and Austin. The Central, Cielo Vista and Mesa Hills areas offer more affordable rental properties for sale, while neighborhoods in the northwestern and eastern parts of the metro area have some of the more expensive housing inventory. The amount residents spend on everyday expenses, such as food and transportation, is slightly less than what the average American pays.

El Paso Real Estate Market Forecast 2019, 2020 & 2021

The median home value in El Paso is $128,300 on Zillow. El Paso home values have gone up 5.6% over the past year and El Paso real estate market predictions they will rise 1.6% within the next year. The median list price per square foot in El Paso is $97, which is lower than the El Paso Metro average of $99. The median price of homes currently listed in El Paso is $174,900. The median rent price in El Paso is $1,100, which is the same as the El Paso Metro median of $1,100.

El Paso Real Estate Market Forecast 2019 & 2020

Graph Credits: Zillow.com

LittleBigHomes.com publishes forecasts for the trend in home prices in 380 Metropolitan Statistical Areas.  The forecast for the trend in the El Paso housing market for the 12 months ending with the 3rd Quarter of 2019 is up. Their Accuracy of the Trend Projection for El Paso is 69%. Accordingly, they estimate that the probability for rising house prices in El Paso is 69% during this period. If this Housing Market Forecast is correct, home prices will be higher in the 3rd Quarter of 2019 than they were in the 3rd Quarter of 2018.

El Paso Housing Market Forecast 2020 – 2021

The forecast for the trend in the El Paso housing market for the 3 years ending with the 3rd Quarter of 2021 is up (positive). The Accuracy of the Trend Prediction for El  Paso is 73%. Accordingly, LittleBigHomes.com estimates that the probability for rising house prices in El  Paso is 73% during this period. If this Housing Market Forecast is correct, home values will be higher in the 3rd Quarter of 2021 than they were in the 3rd  Quarter of 2018. Check this page each quarter for updates to the El Paso Real Estate Market Forecast.

You can check this page of LittleBigHomes each quarter for updates to the El Paso Real Estate Market Forecast.

El Paso Real Estate Market Trends

El Paso real estate market trends show a 2% week-over-week rise in average listing price and a 0% rise in median rent per month. Trulia has 1,326 resale and new homes for sale in El Paso, including open houses, and homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process.

El Paso Real Estate Market Trends

Graph Credits: Trulia.com

As per the real estate company named Redfin, the El Paso housing market is not very competitive. Homes in El Paso receive 2 offers on average and sell in around 112 days. The average sale price of a home in El Paso was $203K last month, up 68.5% since last year. The average sale price per square foot in El Paso is $87, up 35.9% since last year. Homes typically receive 2 offers. Homes sell for about 8% below list price and go pending in around 112 days.
Hot Homes in El Paso can sell for around list price and go pending in around 33 days.

El Paso Housing Market Summary

  • Median Sales Price: $194,069 (On Trulia)
  • Homes For Sale: 1,326 (Trulia)
  • Median Rent Per Month: $1,326
  • Median Household Income: $37,012
  • Home Owners: 66%
  • Single Residents: 24%
  • Median Age: 33
  • College Educated: 22%
  • Transportation: 95% Car dependent, 3% by Public Transport

There are 3,489 homes for sale, ranging from $1.1K to $13M on Realtor.com. 220 of which were newly listed within the last week. Additionally, there are 1,055 rentals, with a range of $325 to $4.5K per month. El Paso have affordable condo/townhomes, and affordable 1 – 2 bedroom listings. In December 2018 the housing market in El Paso, TX was a buyer’s market, which means there were roughly more active homes for sale than there were buyers. Buyer’s markets are generally more advantageous for buyers rather than sellers.

El Paso Housing Market Trends

Graph Credits: Realtor.com®

The median list price of homes in El Paso, TX was $158.5K in December 2018, flat year-over-year. The median listing price per square foot was $91. El Paso, TX is a buyer’s market in December 2018, which means that the supply of homes is greater than the demand for homes. On average, homes in El Paso, TX sell after 90 days on the market. The trend for median days on market in El Paso, TX is flat since last month, and flat since last year.

El Paso Housing Market Trend

Graph Credits: Realtor.com®

There are 351 schools in El Paso, TX. There are 152 elementary schools, 69 middle schools, 54 high schools and 76 private & charter schools.

El Paso, TX Single Family Homes

As per the data from the real estate company called Neigborhoodscout.com, single-family detached homes are the single most common housing type in El Paso, accounting for 67.55% of the city’s housing units. Other types of housing that are prevalent in El Paso include large apartment complexes or high rise apartments ( 18.74%), duplexes, homes converted to apartments or other small apartment buildings ( 8.18%), and a few mobile homes or trailers ( 2.78%).

The most prevalent building size and type in El Paso are three and four bedroom dwellings, chiefly found in single-family detached homes. The city has a mixture of owners and renters, with 58.57% owning and 41.43% renting. Currently, Zillow has 2,353 single family homes for sale in El Paso, Texas. Additionally, there are 593 single family homes for rent in El Paso.

El Paso Foreclosures And Bank Owned Homes

Mortgage delinquency is the first step in the foreclosure process. The percent of delinquent mortgages in El Paso is 1.6%, which is higher than the national value of 1.1%. On RealtyTrac, there are currently properties in El Paso County, TX that are in some stage of foreclosure (default, auction or bank owned) while the number of homes listed for sale on RealtyTrac is 2,472.  In January, the number of properties that received a foreclosure filing in El Paso County, TX was 66% higher than the previous month and 6% lower than the same time last year. Home sales for December 2018 were up 0% compared with the previous month, and down 100% compared with a year ago. The median sales price of a non-distressed home was $0. The median sales price of a foreclosure home was $0, or 0% higher than non-distressed home sales.

  • Homes for Sale = 2,472 (RealtyTrac)
  • Recently Sold = 681
  • Median List Price = $149,900 (1% increase vs Dec 2017)

El Paso Home Prices And Appreciation Rates

El Paso’s appreciation rate notably has been below the national average for the last ten years. The average annual home appreciation rate in El Paso during the period has been just 0.31%, which is lower than 70% of US communities. Over the last year, El Paso appreciation rates have trailed the rest of the nation. In the last twelve months, El Paso’s appreciation rate has been 3.04%, which is lower than appreciation rates in most communities in America.

In the latest quarter, NeighborhoodScout’s data show that house appreciation rates in El Paso were at 0.73%, which equates to an annual appreciation rate of 2.94%. Notably, El Paso’s appreciation rate in the latest quarter is one of the lowest in America. Relative to Texas, their data show that El Paso’s latest annual appreciation rate is lower than 80% of the other cities and towns in Texas.

10 Highest Appreciating El Paso Neighborhoods Since 2000: By Neigborhoodscout.com

There are 183 neighborhoods in El Paso. Thunderbird has a median listing price of $444K, making it the most expensive neighborhood. Horizon City is the most affordable neighborhood in El Paso, with a median listing price of $129.9K. The west side of El Paso features many of the city’s more exclusive neighborhoods.Just south of the El Paso Country Club are two neighborhoods, The Willows and Stonehenge, that feature houses with seven-figure price tags, but also smaller and more reasonably priced homes. These are top 10 neighborhoods in Chattanooga for real estate investment because they have the highest appreciation rates.

best neighborhoods in El Paso TX

Courtesy: Neighborhoodscout.com

Should You Buy El Paso Rental Houses For Sale?

Seasonal fluctuations in home prices and sales volume are moderate in El Paso. Most years, prices rise slightly during the spring and summer months as demand picks up and more buying activity occurs. During the fall and winter months prices remain flat or recede slightly amid weaker demand. If you are thinking of buying El Paso rental houses for sale, you must read this. These things make El Paso real estate market stand out when it comes to choosing a place to invest in 2019 and beyond. Here the top ten reasons to invest in the El Paso investment properties for cash flow.

1. The Cheap Real Estate

The average home in the El Paso housing market costs around $130,000. Upscale homes cost around $300,000 – cheaper than mid-market homes in “hotter” markets. This means the average home in the El Paso real estate market is 40% cheaper than the national average, $225,000, and large three and four bedroom properties worth a premium as El Paso rental properties cost about what you’d pay for a small starter home in more expensive markets like Dallas. And a mid-market home here is certainly cheaper than a condo in a hot market like Austin.

2. The Good Return on the Investment

The median rent here is around $800 a month. You could see significant ROI on rental homes in premium areas, since an apartment rental in the better areas fetch around $1600 a month. For example, El Paso rental houses near the Mountain View command higher rates because they are home to military families and retired Army personnel who pay to be close to work and military medical facilities.

3. The Demographic Momentum

The median age in the United States is around 40. El Paso’s population is relatively younger due to the high level of immigration from Mexico, Central America and the surrounding rural areas. For those reasons, the median age here is only 33. Better yet for the long-term future of the El Paso housing market, nearly a third of residents are under the age of 20, and they’re likely to stay here for work.

4. The Strong Job Market

We could cite quality of life issues like low crime and good schools that bring people to El Paso. Yet that doesn’t matter if you can’t afford to live somewhere, and you can only do that if you have a job. The El Paso job market has an unemployment rate of around 4%. It hit a low of 3.7% in 2018, below both the Texas state and national average unemployment rates. El Paso’s job market is quite diversified, and it is seeing gains in areas like healthcare, government, finance, hospitality and logistics.

There are also a fairly large number of jobs with defense contractors like Raytheon. The fact that El Paso is a major inland border crossing explains the large number of Border Patrol, Customs and DEA jobs in the city. An interesting byproduct of the large bilingual population in the El Paso housing market is the significant number of call centers. If you press 2 for Spanish, there is a good chance you’re calling one of the dozen call centers that employ more than ten thousand people in the city.

The Maquiladora program in Mexico leads to many labor-intensive products being made in neighboring Ciudad Juarez before being shipped to factories in El Paso for assembly into the final product. This insulates the area from the boom and bust cycles much of West Texas sees as oil, grain and cattle prices rise and fall. It also attracts job seekers who fuel demand for properties in the El Paso real estate market.

5. The Large Military Market

Any city that is home to a military base will be home to a large population of renters. Fort Bliss, one of the largest Army bases in the U.S., certainly creates demand for El Paso rental houses. Biggs Army Airfield and the Beaumont Army Medical Center are also located here. They’re major local employers, but one benefit of the El Paso real estate market is that it isn’t the only major source of demand for El Paso rental houses. People coming here for school, work or merely opportunity rent until they can afford to buy or move on.

6. The Sizable Student Market

Being the largest city in the region, the city has its own University of Texas campus, the University of Texas at El Paso or UTEP. This is one of the largest colleges in the state, and it is notable for its large Hispanic student body. There are over twenty thousand students at the school, creating a sizable market for El Paso rental houses. The school also attracts researchers from around the nation.

It is one of the few R1 universities according to the Carnegie classification of higher education institutions. It has a sizable engineering program. However, UTEP is not the only college in the area. The Texas Tech University Health Sciences Center trains future nurses, lab technicians, doctors and biomedical engineers. On top of this are several career colleges, the International Business College and vocational/tech training programs.

7. The High Demand for Affordable Rentals

El Paso is notable for its affordable real estate market. The average pay is well below the American average income, but houses are cheaper, too. For example, El Paso was the only city to hit a Realtor.com list of most affordable metropolitan areas. However, that doesn’t mean there isn’t high demand for El Paso rental houses. Let’s look at the numbers.

The average income for a resident is just $20,000 a year, $8,000 less than the U.S. average. This is skewed by the nearly 20% of residents who earn less than $15,000 a year. The median household income for the US is roughly $55,000. For El Paso residents, it is only $42,000 a year. This creates high demand for cheaper properties, though many of the new subdivisions cater to military personnel who can afford $1500-$2500 for El Paso rental houses.

If you can find or buy small homes, trailers or small condos to meet the demand for people who can only afford $300 to $700 a month in rent, you’ll find people lining up to rent from you. If you can convert a large single family home into multifamily housing, you’ll find plenty of renters, too. When you can see people living in colonias without running water or sewer service simply to own a home of their own, you know there are people eager to move up into a two bedroom house with working utilities.

8. How Geography Limits Expansion

Geography is limiting expansion of the El Paso real estate market in several ways. While it is possible to cross the border, it isn’t something people want to do on a daily basis for work – so the El Paso real estate market can’t grow on the Rio Grande side. The city is named for the pass through the surrounding mountains, and that limits where people can grow.

While Fort Bliss has some on base housing, it can’t house everyone who works there. Nor are you going to see subdivisions catering to civilians break ground there, though it covers over a million acres. Geography limits how much new housing El Paso can build unless they build denser, taller, or both.

9. How Redevelopment Has Hit the Whole City

San Jacinto Plaza is undergoing renovations to create an attractive city center. El Paso’s main thoroughfares are getting a new streetcar line, something that improves public transit in a city that needs it. However, they are creating multiple New Urban style centers instead of trying to just redevelop downtown. This means that you can find properties across the city that are affordable, renovate them, and sell them at a profit when the area becomes more attractive.

10. How Landlord Friendly the State Is

Texas doesn’t have an income tax, but they more than make up for it with high property taxes. However, potential investors will appreciate how landlord friendly the state is, since tenants that don’t respect the property or obligation to pay rent will hurt your cash flow. Texas is very landlord friendly. You can evict tenants if they aren’t in compliance with lease conditions. The state lets you enter your own agreements on how you’ll handle repairs, such as setting your own limit beyond which you’ll reimburse the tenant or deduct the repairs from the rent.

Texas is more relaxed on mandates for security devices. If someone has not paid the rent, you can begin eviction. The law allows them to appeal the eviction, but they must pay rent within five days of the ruling. If they haven’t appealed, paid the rent or left the property, you can send in the sheriff to evict them.

Exact property tax rates in El Paso County, which includes the city of El Paso, depend on where in the county and in what school district a home is located. As a general rule, an El Paso homeowner should expect to pay annual property taxes equivalent to roughly 2 to 2.25% of his home’s market value.

El Paso Real Estate Investment Properties

Maybe you have done a bit of real estate investing in El Paso, Texas but want to take things further and make it into more than a hobby on the side. It’s only wise to think about how you can and should be investing your money. If you invest wisely, you could secure your future. If you are a beginner in the business of cash flow real estate investing, it very important to read good books on real estate.

Most investors naturally gravitate to residential property investment. When looking for the best real estate investments, you should focus on markets with relatively high population and employment growth. Both of them translate into high demand for housing. If housing supply meets housing demand, real estate investors should not miss the opportunity since entry prices of homes remain affordable.

You must also learn from savvy real estate investors who have retired early on in their lives by investing in some of the best real estate markets like El Paso, TX. El Paso is an affordable housing market with several large renter populations. Demographic growth and job growth are attracting residents to a market that can’t grow with demand, and that makes it an excellent opportunity for investors.

Buying investment property is different than buying an owner-occupied home. The investment properties are designed to make money as rentals, which means you must look at it solely as an income producing entity just like any other business. 

Whether you are a beginner or a seasoned pro you probably realize the most important factor that will determine your success as a Real Estate Investor is your ability to find great real estate investments.

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Apart from the El Paso real estate market, you can also invest in Chattanooga, TN. Chattanooga is a small city seeing significant growth. It is attracting people from around the state, and they stay due to the excellent quality of life and strong economy. Its population growth has been a steady nearly 1% a year for almost a decade. The strong job market and relatively young population explains why the Chattanooga area saw population grow roughly 1.1% in 2017.

And since the 2010 Census, the city has been the second fastest growing big city in the state. If it is successful in cultivating local high tech startups and new businesses, it will see even faster growth as it attracts people to work here that then buy homes in the Chattanooga real estate market and start their families here.

If you’re buying Chattanooga rental homes, the high sales taxes don’t affect you. The city has been promoted in a number of articles as a great place to retire, and that is only made more so by their tax freeze for seniors.

Another market that we suggest is the housing market in Durham, NC. There are many reasons to buy investment properties in the Durham housing market. An unusual combination of features makes Durham attractive to real estate investors, since it creates a large population of renters willing and able to pay more per month to live here because they cannot necessarily find their dream home.

While redevelopment downtown is converting industrial real estate into rental units to meet demand in the Durham real estate market, it isn’t enough. This helps explain why rents are increasing faster than the rate of inflation. However, you’re not going to see a ton of new apartments and condos because the city’s zoning laws continue to favor single family, detached houses.

Since the city is running out of large vacant areas near utilities to build new tracts of single family homes on, building out is not going to help the area meet demand for new housing. NIMBY movements can fight the rezoning of property to be able to build multi-family housing. All of this guarantees strong future growth of rental rates for anyone holding Durham rental properties.

Let us know which real estate markets you consider best for real estate investing! If you need an expert investment advise, you may fill up the form given here. 

One of our investment specialists will get in touch with you to discuss all facets of searching for, buying, and owning a turnkey investment property.


*Remember, caveat emptor still applies when buying a property anywhere. The information contained in this article was pulled from third party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, the Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.

References:

Military info
https://en.wikipedia.org/wiki/El_Paso,_Texas

College market
https://en.wikipedia.org/wiki/University_of_Texas_at_El_Paso
http://elpaso.ttuhsc.edu

Demographic momentum
https://livability.com/tx/el-paso

Home prices
https://livability.com/tx/el-paso/real-estate/why-el-paso-tx-is-a-great-place-to-live
https://realestate.usnews.com/places/texas/el-paso

Job market                                                                                                https://realestate.usnews.com/places/texas/el-paso/jobs
http://www.city-data.com/us-cities/The-South/El-Paso-Economy.html
https://www.elpasotimes.com/story/money/business/2018/01/22/unemployment-rate-jobs-el-paso-texas/1049496001/

Affordable market                                                                      https://www.bestplaces.net/economy/city/texas/el_paso
https://elpasoheraldpost.com/el-paso-housing-market-recognized-as-one-of-the-most-affordable-in-nation              http://www.governing.com/topics/transportation-infrastructure/gov-texas-colonias-border-infrastructure.html

Renovations
https://www.theatlantic.com/business/archive/2016/01/el-paso-urban-walkable-americans/431661

Landlord friendly
https://www.auction.com/blog/5-landlord-friendly-states-in-2019
https://www.barkerhillrealty.com/landlord-guide/how-to-evict-a-tenant-in-texas

Market Data, Trends and Forecast                                                                                      https://www.zillow.com/ElPaso-tx/home-values                                                            https://www.bestplaces.net/cost-of-living/el-paso-tx/houston-tx/50000 https://realestate.usnews.com/places/texas/el-paso https://www.realtytrac.com/statsandtrends/foreclosuretrends/tx/el-paso-county https://www.neighborhoodscout.com/tx/el-paso/real-estate                            https://www.redfin.com/city/6171/TX/El-Paso/housing-market                    https://www.trulia.com/real_estate/El_Paso-Texas                                    https://www.realtor.com/realestateandhomes-search/El-Paso_TX/overview            https://www.littlebighomes.com/real-estate-el-paso.html                https://www.investopedia.com/walkthrough/guide-buying-house-us/real-estate-guide-top-us-cities/southern-real-estate-markets/el-paso-real-estate-market                                          https://www.elpasotimes.com/story/news/local/el-paso/2018/01/10/el-paso-ranked-4th-hottest-real-estate-market-watch-2018-truliai/1019109001


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