The westernmost Texas city of El Paso is unique from the rest of the Lone Star State. Not only are we a border town that sees a lot of traffic and economic activity from Juarez, Mexico, our southern neighbor, but we also have close ties to our sister city of Las Cruces, New Mexico. Not to mention our unique landscape, climate, and beautiful mountains.
The year 2020—like in the rest of the country—put several strains on the El Paso economy, shutting down many small businesses and slowing down new investments and growth. As the economy reopens and begins to flourish again, El Paso residents might be surprised to learn that despite the tumultuous year, the real estate market in the border city did not take the pummeling that some expected. In fact, the El Paso real estate market saw an uptick in home-buying during the year 2020.
As we enter the new year, let’s look at some key aspects of the housing market in our local area and some mortgage predictions.
The Impacts of COVID on Interest Rates
It’s no secret at this point that interest rates dropped dramatically during the pandemic, going as low as 2.5% in March and fluctuating only up to 3.5%. This led to a high demand for homes in the spring and continued well into the end of the year.
The allure of savings spread across the country and also led homeowners to refinance their loans. In 2019, mortgage rates were said to be at a low and were averaging out 3.9%. A half a percentage point can add hundreds of dollars a year and even tens of thousands of dollars throughout the life of the loan.
Economic Forecasts of 2021 Interest Rates and More
Some economic predictions suggest that while the rates may not stay at 2020 lows, they will continue to be considerably lower hovering around the 3.1% or 3.3% mark. The chief economist of the National Association of Realtors, Lawrence Yun, told Forbes magazine, “rates are more likely to rise than fall, but it will be an inconsequential move.” According to the Mortgage Bankers Association, the average rate for a 30-day mortgage will gradually increase to 3.2%.
As the Coronavirus vaccine rolls out, the mortgage rates may continue to see record lows. Some suggest that it will be a volatile year for mortgage rates as the economy reopens and confidence returns with the vaccine slowing spread. This can lead to an upsurge in economic activity. Other predictions suggest that the refinance boom will slow some as the rates may rise just enough to discourage the refinance process but still attract new homebuyers looking to buy.
The Housing Market in El Paso and What Homebuyers Might Expect
There has been a lot of uncertainty in the city of El Paso in recent months, but local real estate agents have seen a consistent demand for homes. From conflicting county and city COVID-19 restrictions to closing businesses to widespread online learning, many people have seen the rhythm of “normal” life altered considerably.
Many rental prices have gone up to the point where people find that if they are paying that much for rentals they might as well invest in a home. All of these factors have contributed to the very unprecedented situation that many cities and towns are facing.
Homes in the Sun City are currently only staying on the market for an average of 53 days. This is down 20% from last year. Part of the reason for this is the fact that there are enough people with “essential work” that provides financial security to keep a large sector of the economy going.
Other factors that help El Paso’s housing market include the fact that El Paso has a large industry in health care and education, as well as a large military installation that is responsible for a lot of economic activity in the area. That does not include other federal agencies like Border Patrol, Customs, DEA, and other law enforcement agencies that have a presence because of the city’s proximity to Mexico.
Data points to strong buyer demand and a very distinguishable seller’s market that promises plenty of competition for the closing table. About 50% of the buyers that bought homes in El Paso this past year were local and 17% seem to come from other Texas cities like Dallas and Houston. There are also out-of-state residents from places like New York City and Los Angeles looking to buy in El Paso as dynamics in the country and work-from-home-models allow people the freedom to move around.
Ready to Become a Homeowner in the Sun City?
Things look optimistic for the new upcoming year and mortgage rates continue to keep homeownership affordable for people ready to make the jump. If you’re paying exorbitant rental prices, consider investing in your first home. Here at Rocky Mountain Mortgage Company, we help you navigate the process and provide the necessary information for you to make the right choice for you. Call us today and find out more.
