Nearly 9 out of 10 homes for sale are affordable on a the national median income.
El Paso is the most affordable housing market in the country, with 89 percent of homes for sale affordable on the national median income, a higher share than any other major U.S. metro area.
This is according to Redfin’s housing affordability dashboard, which allows anyone to quickly understand how affordable homes are in a given area, and compare affordability among different parts of the U.S.
The share of homes affordable in May 2019 is down slightly, from 93.6 percent in May 2018.
Other cities in Texas are also quite affordable, including another border town, McAllen, TX. McAllen is the third most affordable in the U.S after El Paso (Detroit, MI holds the number two slot), with 80 percent of homes for sale affordable on the local median salary. Major Texas cities however, fall further behind. San Antonio is 53.5 percent, Fort Worth is 48.8 percent, Houston is 48.6 percent, and Austin is 38.5 percent affordable on the national median salary.
To calculate the share of homes affordable on a given income, the dashboard takes into account household income, down payment percentage, mortgage interest rate, mortgage length and property type, and operates on the guideline that homeowners should spend no more than 30 percent of their gross monthly income on housing.
A home is defined as affordable if the monthly housing payment is less than 30 percent of the monthly pre-tax income of the median household from the 2017 American Community Survey of $61,372. Mortgage payments were calculated assuming a 20 percent down payment, a 30-year fixed rate mortgage. Property taxes were calculated using an annual rate of 1.125 percent of the list price. The monthly housing payment is the monthly mortgage payment plus the monthly property tax payment.
Take a closer look at this town, and get to know the most affordable city in the U.S.
The Local Market
“A lot of people are moving to El Paso because of the affordable quality of life and great weather. The cost of living has been reasonable for many years and as a result, the rest of the U.S. has noticed our border town more and more,” said Redfin agent Maggie Garcia. “El Paso is also home to a busy military base, Fort Bliss, which fuels our local economy by creating many jobs onsite. Additionally, as a border town, many people work in law enforcement and hold jobs such as customs officers, border patrol agents, and police officers. Teachers and first responders like EMTs also have a big presence. With so much opportunity, the housing market has grown more competitive for buyers. If homes are priced right, you might see multiple offers.”
The median home sale price for the El Paso metro area was $167,950, up 7.9 percent year over year in May, the fifth consecutive month of annual price increases. Similarly, sales of homes in El Paso were up 3.8 percent year over year in May, while the number of homes for sale was down 8.3 percent year over year, indicating that homebuyer demand is growing faster than supply.
From 2014 to 2017, average income in El Paso grew 16 percent, compared to 12 percent growth nationally, and only 9 percent growth in Texas.
“Growth in incomes almost always translates to growth in home prices,” explained Redfin chief economist Daryl Fairweather. “As people see their incomes rise, the first change they often make is buying a home or upgrading to a bigger, better one. El Paso’s affordability, combined with its outlook for continued home price growth, makes it a really attractive place for first-time homebuyers looking to increase their wealth through home equity.”
While the El Paso housing market still has a ways to go before it feels truly hot, its temperature is rising quickly. The typical home that sold in May went under contract in 48 days. That’s almost twice as fast as a year earlier when the typical home spent 87 days on the market..
It helps, of course, to have key features that are extra desirable in this region.
“People like living in El Paso because of the great weather and friendly people. The city has a small town feel, but with rich culture, great food, mountains and outdoor activities,” Maggie said. “Known as the sun city for its abundant sunshine, buyers I’m working with this year are most interested in homes that incorporate outdoor living to take advantage, as well as efficient home cooling systems, open kitchens, and proximity to Fort Bliss.”