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Thursday, March 28, 2024
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McAllen
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Commentary: Homeownership must be a reality for people

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Al Villarreal is the CEO of IBC Bank Brownsville and Adrian Villarreal is the CEO of IBC Bank McAllen. Photo by Roberto Hugo Gonzalez
Al Villarreal is the CEO of IBC Bank Brownsville and Adrian Villarreal is the CEO of IBC Bank McAllen. Photo by Roberto Hugo Gonzalez

Texas Border Business

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By Adrian and Al Villarreal

When people talk about “the American Dream,” the conversation often includes owning a home.

Home ownership is considered one of the best investments a person can make, and a stepping-stone in building individual wealth.

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Did you know homeowners have significantly more wealth than renters, according to a Federal Reserve report in 2020? CNBC put it this way: In 2019, homeowners had a median net worth of $255,000, while renters reported a net worth of just $6,300, a difference of 40 times between the two groups.

Unfortunately, sometimes the dream of owning a home can be challenging. Down payment and closing costs remain the No. 1 obstacle to owning a home. While some barriers have been removed over the decades, certain challenges still remain.

With help from community banks and other qualified lenders, the home-buying gap can be narrowed to make home ownership more accessible to more people. Let’s look at some of the challenges people face when considering a home purchase, and how lenders can help. In addition to the closing costs and down payment requirements — which can be significant — there are other factors at play. Take, for instance, credit history or lack of access to credit. Then there is a lack of understanding of the process.

Let’s face it: Buying a home can be confusing.

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Inflation is a category in and of itself. We’re paying more for everythingthese days. The USDA’s Economic Research Service reported food costs at the grocery store are 11.9% higher than last year around this time. Additionally, summer gas prices, while on the downward trend momentarily, have been reaching record heights. The cost of housing has also trended higher. The Federal Reserve Bank of St. Louis reported the median sales price of houses this year jumped to a staggering $428,700 nationwide. Rent is also spiking at a double-digit rate.

Our Texas communities are experiencing much of the same, and the Rio GrandeValley is no different. Today, the median price for a home in McAllen is $285,990.

Just one month ago, it was $279,700. And one year ago, homebuyers were facing a median price of $264,990.

Brownsville’s median price comes in at $249,000, compared to $244,500 a month ago. One year ago, the median price was $206,950. That means Brownsville home prices are up 20% compared to last year.

Despite these trends, there are pockets of good news. In the 1990s, the conventional mortgage industry began offering a broader range of affordable lending programs. As an example, local real estate agents work with lenders that use state bond programs aimed at reducing buyer closing costs and down payments.

While there isn’t a plethora of assistance, there are numerous lenders, as well as programs, that will work with first-time, low-income and other buyers to complete the purchase of a home. Many programs have the goal of making homeownership simpler, faster and more accessible to all Americans.

One thing potential homebuyers can do is work with their community bank or other qualified lenders to educate themselves on all the options available and find a loan program that best fits their budget.

We all need to work together to ensure the “American Dream” of owning a home remains accessible to those who want to achieve it.

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