What to Expect from McAllen Real Estate in 2016

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Today we’re going to recap 2015 and go over what to expect from the McAllen real estate market  in 2016.

In 2015, we sold a ton of homes. However, we are not selling homes like we did between 2006 and 2008, and probably never will again. Back then, lenders gave out loans to people who could not pay them back. We had another peak in home sales in 2010 due to tax incentives. People bought homes to save a few thousand bucks. If you take out those two unsustainable peaks, you can see that in 2015, we performed well with home sales.

Houses have always been considered a great investment because real estate typically outpaces inflation. According to the federal government, in 2015, inflation is at 0%. Meanwhile, home prices appreciated by 7.3% in McAllen. As you can see, real estate is a great investment.

Now, let’s talk about what you can expect in 2016. If you take a look at building permits, you can understand how many new construction homes will be coming onto the market. In the last 12 months, we have had 3,873 new dwelling permits, which includes everything from apartments to mansions. In the same timeframe, 6,900 new jobs were created. That’s 1.78 new jobs per new dwelling, so we have underbuilt the market. That means you can expect property values to go up and rent prices to increase.

Housing is still affordable in McAllen. If you look at the median household income from 2014, it was $34,801. The median home price in 2014 was $116,400. The numbers for 2015 won’t be out until August, but McAllen is a beautiful area and still affordable.

Many people think now is the time to sell. They are absolutely right! If you’re thinking about selling on your own, check out this statistic that released from the National Association of Realtors: in 2015, only 8% of homes sold were For Sale By Owner properties. In the same year, 89% of homes sold were handled by a real estate agent. That 8% For Sale By Owner rate is the lowest we’ve seen in McAllen’s history. In today’s market, you need an expert advisor.

Here at the Ryan and Brian Team, we know our market. If you have any questions, give us a call or send us an email. We would be happy to help you!

Should You Buy or Rent in McAllen?

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Are you one of the many people out there considering whether it makes more sense to rent or buy a home in McAllen? Today we are going to give you some facts and information that will hopefully help make your decision a little easier.

A lot of people have not purchased a home yet because they are uncomfortable with taking on the responsibility of a mortgage payment, which is fair. However, unless you are living rent-free with your parents, you are paying someone’s mortgage. Either your own, or your landlord’s. Homeowners pay down their own principal, while renters pay down the landlord's principal, plus a rate of return.

While rental rates continue to rise each year, a mortgage payment will remain fixed. With a 30-year fixed mortgage, you know exactly what your payment will be for the next 30 years. At the same time, 88% of property managers have raised their rental rates in the last 12 months, and there are no signs of this trend stopping. Rental rates are predicted to rise by 8% in the next year on average. The rise in rents will be at a much faster pace than projected income appreciation. This, in turn, means renters will not have enough to pay all their debts each month, forcing them to make trade-offs and cutbacks.

Historically, the percentage of your income needed to pay for a mortgage vs. paying for rent is at a much closer margin than in the past. Rent used to cost a renter about 25% of their income, while a mortgage cost a homeowner about 22% of theirs. With rising rental rates and lowered mortgage interest, the average renter now spends 30% of their income on rent, while a buyer only pays 15.3% of their income on average.

As a homeowner, your mortgage payment is a form of forced savings. It allows you to gain equity in your home that you can tap into later in life. With rent, you are also guaranteeing that equity. For your landlord.

The bottom line is whether you are looking for a primary residence or vacation home, buying may make more sense than renting. If you have any questions or are curious about how much a home will set you back in this market, give us a call or send us an email. We look forward to hearing from you!