The next economic boom in the Rio Grande Valley is taking shape right before our eyes. Growing at a surprising rate and projected to continue at a pace that will make our heads spin, the Greater McAllen area has residential home contractors trying to keep up with high demand. The land development, new home construction, and commercial buildings erecting in the high-traffic areas we are experiencing are something tangible we can definitely see around us – it’s especially evident in the increase in traffic that we “Valleyites” are not used to.
The most notable area with tremendous growth is the City of Edinburg. The city has announced a long list of commercial developments and commodities (most of which will be seen this coming year), including the RGV Viper Arena, the second phase of The Shoppes at Rio Grande Valley off of Trenton, several luxury hotels, and our Texas Native HEB. The biggest draw, the University of Texas Rio Grande Valley and the new School of Medicine, has upped the ante for more multi-family buildings. The medical area has encouraged developers to take on the surrounding empty land and create residential lots for construction, something the growing city is in dire need of as builders’ greatest obstacles are finding the lots. They have the buyers lined up, but no affordable land to build on unless the consumer wants to go outside the city limits or compromise on the location. The selection is limited as accessibility to commercial locations (i.e., grocery stores, shopping centers, and restaurants) continue to be a strong resource that buyers want; they want to be close to the action. We see residential subdivisions going up and selling out in record time and at record prices. However, they are still not being developed fast enough for the average Valley Buyer!
The City of McAllen is not too far behind with their never-ending growth, and although personally I didn’t see enough land for expansion in the city, plans for development have proved me wrong. Not only are they adding over 80,000 square feet of retail space and parking decks for 1,100 cars at La Plaza Mall, but their biggest announcement was the Texas A&M University Satellite Campus (WHOOP!) which will all be part of the Tres Lagos Development, McAllen’s first Sustainable Master Planned Community. We’re talking single-family residential, multi-family residential, townhomes and commercial retail space. Did I mention a couple of man-made lakes?
Rental rates are at an all-time high in our country and the Valley is no exception. Due to the trying times our economy went through several years ago, Gen-Xers and Baby Boomers held on to their real estate and because of the uncertainty of the market, Millennials were not buying, instead moving back in with their parents. However, 2015 proved to be the year of re-building as Millennials emerged in full force, and represented almost 2 million sales – more than one-third of the total home sales. This group is expected to continue to play a major buyer role in 2016. 1
The most recent home pending sales report from the National Association of Realtors states that sales plateaued this fall for the third time in four months because buyers continue to battle limited home sale availability and prices that are rising too quickly in some markets.2 As the economy continues to stay in the green, the financially-recovered Generation X and Baby Boomers who are entering retirement will play a double role on the market. Because the majority are already home-owners, they will become sellers and then buyers. It’s a sellers’ market, but as prices continue to soar and with the constant threat of raised interest rates, buyers are left with no inventory to choose from. Yes, we have a healthy luxury buyers’ market but builders are ignoring the average Valley buyer, whose median price in the fall of 2015 was $131,400 according to the Texas A&M Real Estate Center.
We are presently in a high crescendo after the dark years of real estate past. Readers, pay close attention: at this moment, the phrase ‘’the market is hot” would be a tremendous understatement. Our world is changing around us in all aspects of life, but it is especially obvious with the business developments happening locally. The job opportunities are going to be tremendous for the Rio Grande Valley. Let’s hope that we can keep up with the demand for properties that will come from these job-creating developments! Look for our articles to continue getting the most up-to-date information on how growth will affect not only you but our local economy and real estate. The next time you mention to someone you’re from the Rio Grande Valley, they will know exactly where to point on the map.
- National Association of Realtors (realor.com), December 16, 2015. By Jonathan Smoke, http://www.realtor.com/news/trends/five-key-trends-for-2016/
- National Associtions of Realtors (realtor.org), 2015. Based on a study by Lawrence Yun, NAR Chief Economist. http://www.realtor.org/topics/pending-home-sales
