EL PASO, Texas -- Mortgage rates saw their largest weekly drop since 1981 Thursday. A 30-year fixed-rate mortgage now stands at 6.6%, down 1.2%.
But it's still a far cry from where rates stood one year ago at 3.1%.
As rates remain high during a volatile time with high inflation, many prospective homebuyers are feeling the pain.
"Somebody typically that could have qualified for a $250,000 loan may qualify for $200,000 now," Jackie York, President of the Greater El Paso Association of Realtors said.
Alejandro Munoz saw his dream home slip away due to economic factors. He was in the process of purchasing a new build in far east El Paso last spring. But as the process played out, and inflation grew worse, the price kept climbing.
"The original cost of the home was going to be about $1,200 per month," Munoz said. "By the time we were going to close on it, it went up to about $2,300 per month."
He had to let the deal go, losing out on his dream home. Instead, he's now living at home with his parents and 4-year-old daughter.
"He was devastated," Felix Munoz, Alejandro's father, said. "I was really, really devastated, too. His house was basically two blocks away from here."
Seeing his son's devastation, Munoz used that as a catalyst to launch a campaign for District 5's El Paso City Council seat. His run, although unsuccessful, was primarily focused on lowering property taxes. He attributed the city not adopting a no-new-revenue tax rate as one of the reasons his son's payment became too much to take on.
A City of El Paso spokeswoman said in a statement, in part: "The City has been and will continue to be aggressive about lowering the impact to taxpayers while still providing a high quality of life and place to our community. This is why the Council approved the largest tax rate decrease in 35 years adopted in August and why we decreased property taxes for 52,000 seniors and people with disabilities through City exemptions."
El Paso's Housing Market "Strong, Healthy"
Despite the struggles for some homebuyers, and El Paso having one of the highest property tax rates in the country, York says El Paso's housing market is still strong and healthy.
"Right now the demand is still high and the supply is low," York said. "We're under a 6-month inventory. As long as we stay under that 6-month inventory, it'll remain a seller's market and a strong housing market."
El Paso's active inventory stood at 1,926 in October 2022, according to GEPAR's market statistics. In October 2019, just prior to the onset of the pandemic and prior to high inflation, the inventory stood at 3,164.
In that same time span, El Paso saw its median sales price rise from $163,000 to $240,000 and homes are staying on the market for half the amount of time.
York predicts home values will either remain steady or even increase slightly due to the low inventory. If those valuations continue to climb, she'd like to see the taxing entities offset the increase by lowering tax rates.
"We all want to see our values go up. I mean, that's equity in our pockets. If our values are going to go up, the rate should come down."
ABC-7 asked the City of El Paso if it would make an effort to adopt a no-new-revenue tax rate in the future, especially considering El Pasoans just passed a tax increase in the form of three bond propositions totaling more than $272,000,000.
A city spokeswoman did not answer that question directly, but did cite its $28.3 million savings on the El Paso Electric rate case settlement. The city also cited being recently recognized by the online real estate firm Orchard.com, which recently ranked El Paso as one of the top 15 "under-the-radar" cities to live in Texas.