McALLEN, Texas (ValleyCentral) — Rent is on the rise across the Rio Grande Valley and is expected to continue an upward trend in 2023 — despite rent reductions in other parts of the nation.
In the Valley, however, the pace of recent rent hikes is expected to slow as the year progresses, according to an analysis provided to ValleyCentral by Peter Drummond, representing website Apartments.com.
Rents surged in 2022. In Hidalgo County, the average fair market value for rental properties increased 10.55% year-over-year during FY2022, and had increased by 7.34% year-over-year at the of 2022. In Cameron County, the average fair market value increased by 6.64% year-over-year in FY 2022, and had increased by 11.21% year-over-year by the year’s end.
Yet, there are now some indications rent increases will slow this year.
“By later this year, Brownsville-Harlingen is forecasted to see year-over-year rent growth decline to +2% from its current figure of +6%,” the analysis stated. “Rent growth in the McAllen area is also forecasted to decline, albeit to +2.5% later this year from its current +5%.”
This supports a report earlier this month that rent in the Valley is stabilizing.
Across all sizes of properties, residents are paying more in Hidalgo County, where rent averages $901 per month, as compared to Cameron County’s average rent of $877 per month, according to Apartments.com. Both areas are expected to see similar rent increases, meaning the differences between the two counties will persist.
“This gap is forecasted to remain similar by the end of next year, at about $942 in the McAllen area and about $917 in the Brownsville area,” according to the analysis provided to ValleyCentral.
Yet, there are indications that the housing market in Hidalgo County is undergoing a defining change. For years now, the McAllen area has outpaced Brownsville in adding rental units.
“Since early 2018, the McAllen metro has expanded its inventory by 2,400 units while Brownsville-Harlingen has added a little over 500,” the analysis stated. “This has led to a greater number of 4 and 5 star units in Hidalgo County — where luxury apartments account for 28% of inventory–than Cameron County — where they account for 23% of the total.”
More renters are drawn to higher-end apartments, according to the Apartments.com analysis, which added that “Hidalgo [County] could outperform in this metric, but much remains to be seen.”
The McAllen area currently has higher vacancies than the Brownsville area, at 6.3% and 4.4%, respectively, but this has been the trend over the past 6 years, the analysis showed.
In Cameron County, the housing market isn’t centered, but is instead clustered around three main areas.
“The Brownsville metro is fairly polycentric, with key secondary anchors in the cities of Harlingen and South Padre Island,” the Apartments.com analysis said. “This economic diversity is a strength that could support prospects for multifamily in Cameron County over the longer term.”
