Calvary comes to El Paso.

Byline: Vic Kolenc

More than 70,000 Army soldiers and their families are expected to march into El Paso, Texas, in the next five years.

That prospect has boosted El Paso's housing market in the past three years, and it's expected to lift it again. Although the number of homes sold in El Paso has declined this year, prices continue to rise -- counter to what's happening in many other metro markets around the country.

"To a certain degree we've been insulated from the rest of the country, and part of that is the government investing $5 billion in infrastructure at Fort Bliss and the growth of Fort Bliss," said Dan Olivas, president of the Greater El Paso Association of Realtors.

Fort Bliss, an Army post with 17,600 soldiers, has always been an important component of El Paso's economy, but its influence should grow as the post's military population is scheduled to more than double in the next five years.

El Paso, with more than 730,000 people, is also helped by growth across the Rio Grande in Juarez, Mexico. That area has a population of more than 1.3 million and still enjoys a healthy manufacturing economy despite the economic woes in the United States.

Attracted by El Paso's low home prices and the promise of growth, out-of-town investors pumped up the housing market in 2005 and 2006. That's when home prices increased 18 percent and 14 percent respectively, according to National Association of Realtors data.

"Historically, this city has never had huge appreciations or depreciations. It's been a real steady market for decades" with appreciation of around 3 percent a year, said Charles de Wetter, president of Coldwell Banker de Wetter Hovious, one of El Paso's largest real estate firms. "When there's a slower economy nationally, it's good to be in a place like this."

The median, or market midpoint, price for single-family resale homes in El Paso increased 8.5 percent in the first three months of the year -- the sixth-largest percentage increase among 149 metro areas surveyed by NAR. The median sales price in the first quarter was $134,600, compared to $124,000 a year ago.

In 2007, the median price increase was 3.4 percent.

As far as trouble goes, El Paso home foreclosures decreased 52 percent in the first quarter, while foreclosures more than doubled nationwide, according to RealtyTrac, a California company that tracks foreclosures nationally.

One thing that's helped keep El Paso foreclosures down is the fact that adjustable-rate mortgages and other creative financing vehicles are not used much in the city, El Paso mortage experts said. Conventional 30-year mortgages are the most popular forms of home financing here.

"A lot of areas of the United States where real estate markets have collapsed are areas where prices rose excessively. In El Paso, that type of market condition did not materialize," said Tom Fullerton, an economics professor at the University of Texas at El Paso.

"The local economy has remained in good shape throughout 2008, and whenever job creation is strong, it helps support good real estate fundamentals," Fullerton added.

El Paso home prices have continued to increase, even though inventory has risen; the more than 5,100 resale and new homes on the market in early July were substantially above the more than 3,200 homes on the market a year ago.

"Houses are selling in El Paso, but at a slower rate than a year, two years ago," said de Wetter, the real estate broker. "There is demand out there. A lot of sellers in the marketplace are not realistic about pricing, but are getting more so."

New home starts in El Paso are slower this year than last year, noted Ray Adauto, executive vice president of the El Paso Association of Builders.

"We'll be fortunate to hit 3,000 [home starts] this year," Adauto said. "People are having a harder time qualifying for mortgages."

Home builders have spent part of this year trying to get rid of high-end homes above $250,000; some are offering substantial discounts to sell their inventory. Builders have shifted to constructing more affordable homes, at prices below $200,000.

Eugenio Aleman, senior economist for Wells Fargo Bank in Minneapolis, said in a recent report that El Paso's economic performance since mid-2006 has been "impressive." Even so, El Paso's housing market is "suffering the consequences of the national credit crunch," and home sales will "remain weak for the rest of the year," he predicted.

Olivas, the El Paso Realtors' Association president, doesn't see it that way.

"I don't think we'll see the market dragging for the rest of the year," he said.

He said more troops are expected at Fort Bliss later this year, doctors are going to be moving in for the new Texas Tech University medical school scheduled to open next year , and more home buyers from Mexico are looking in El Paso as violence in Juarez and other Mexican border cities increases.

Olivas added, "We're not going to follow the pattern of the rest of the nation. I think we're ahead of that curve."

Vic Kolenc is a business reporter for the El Paso Times.