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McAllen's Thriving Economy Going Strong
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1 Comments ::  :: REAL ESTATE, LOCAL, ECONOMY |
McAllen’s economy posted strong growth in December—the metro’s business-cycle index recorded annualized growth of 3.4 percent, and jobs rose by 1.8 percent. In 2006, the metro created 6,300 net jobs for growth of 3.2 percent. Financial activities, education and health services, and leisure and hospitality services were among the fastest-growing industries in 2006, fueled in part by the metro’s rapid population growth.
Incomes will catch up to the area's economic growth, currently more than double the state average of 2.9%.
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Business Growth in Border Towns
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The retail sector was a particular standout as well, with many national retailers opening stores and the addition of a Premium Outlet Mall, which drew large numbers of Mexican nationals from across the border. Visa credit card has reported that out of its card holders in the entire country of Mexico, 10% of their total, occur in McAllen, Texas U.S.A.
The border city has traditionally experienced 40% of its entire retail sales from Mexican citizens, which support the city's infrastructure and quality of life. This has caused the city to lead the entire State of Texas in job growth, and to lead the United States of America in projected housing starts in 2007, increasing even more in 2008, according to a recent projection by both Forbes and Money Magazines. A healthy maquiladora sector in sister city Reynosa, along with a stable peso, is also contributing to McAllen’s continued expansion.
A Hispanic baby boom is working its way through the regional economy, and families will soon be trading up their digs. McAllen is already 85% Latino, and the average age of those households is two decades younger than that of non-Hispanic ones. Latino families are also larger: 3.8 members, on average, compared with 2.4 for Caucasians. Incomes will catch up to the area's economic growth, currently more than double the state average of 2.9%.
So far, young cheap labor force has driven a development boom. Manufacturers locate on both sides of the border to take advantage of low wages and the common market for goods created by NAFTA. As the economy matures, higher-paying industries like health care and business services will grow. |
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ByKyle Arnold @
Friday, March 23, 2007 12:06 PM |
McALLEN — Housing woes are battering Wall Street and hundreds of real estate markets across the nation, but the Rio Grande Valley’s home market appears to have dodged the bullet.
Hidalgo County real estate experts say steadily growing home prices are buoying the local home market and preventing drowning borrowers from getting over their head with “subprime” home loans. The loans, which are being blamed for the current volatility of the stock market, were offered to millions of potential home owners in recent years, often those with poor credit.
Since the borrowers were considered high risk, the loans were often at a higher interest rate or an adjustable-rate loan, which starts at a low interest rate and can increase as time goes on.
With interest rates steadily rising during the last two years, many homeowners can’t afford the higher payments.
At that point, foreclosure is often the only option for the companies.
“Several years after these companies started selling (subprime mortgages), now it’s coming back to bite them,” said Eva-Jean Radle, a Realtor with Re/Max in the Valley and chair of the McAllen Chamber of Commerce.
Nationally, subprime lenders like New Century Financial Corp., Accredited Home Lenders Holding Co. and People’s Choice Financial Corp. have made investors jittery.
Texas’ five biggest markets — Dallas, Fort Worth, San Antonio, Austin and Houston — are all among the top 20 cities in the country in foreclosure rates, according to RealtyTrac, a nationwide foreclosure listing service. In those cities, at least one in every 50 homes went into foreclosure in 2006.
But McAllen continues to claim one of the best foreclosure rates in the entire country; only one in 427 homes hit the auction block last year.
The biggest factor in McAllen’s lack of foreclosures has been steadily growing home prices, as opposed to other parts of the state and country, where home values are dipping.
The average home selling price in McAllen rose more than $15,000 between January 2006 and January of this year, according to the Texas A&M Real Estate Center.
Rising home prices allows troubled borrowers more opportunities to sell, pay off their debt and avoid foreclosure, said Paul Schwab, president of Valley Mortgage Co. in McAllen.
McAllen’s homes are undervalued by about 13 percent, according to a reported GlobalInsight and National City released Monday. That should help insulate this market in the event of many market problems.
Area insiders also say a strong economy and local lenders’ stubbornness to not get into the adjustable-rate mortgage business has helped. McAllen’s low per-capita income, near the lowest in the country, may have saved many borrowers from ever being offered adjustable-rate mortgages.
“We haven’t pushed the limits of borrowing here in this area,” said Jerry Prock, a finance professor at the University of Texas–Pan American. “It’s a relatively conservative area and we haven’t had many subprime lenders operating down here.”
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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410. For this and more on local stories, visit www.themonitor.com. |
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