Mexicans fleeing drug war help El Paso house market

EL PASO, Texas Wed Sep 10, 2008 2:41pm EDT

EL PASO, Texas (Reuters) - Mexicans fleeing a gruesome drug war are buying homes across the border in El Paso, helping keep the Texan city's property market afloat despite the worst U.S. housing crisis in decades.

With clashes between rival drug gangs leaving dead bodies on the streets of the Mexican border city of Ciudad Juarez almost daily, hundreds of middle class Mexicans are selling up and moving to El Paso, just over the Rio Grande.

The cities are a short walk apart, but there have been 12 homicides in El Paso this year compared to some 900 in Ciudad Juarez, where law and order has collapsed as Mexico's most wanted man Joaquin "Shorty" Guzman battles local drug baron Vicente Carrillo Fuentes for U.S. smuggling routes.

The increase in the number of Mexican buyers has helped support El Paso's housing market. While foreclosures hit a record high across the United States between April and June, El Paso estate agents report brisk sales of houses and apartments in the $80,000 to $300,000 range and broadly steady prices.

"Our market is not a plummeting market compared to the rest of the country," said Dan Olivas, president of the Greater El Paso Association of Realtors.

"A lot of that is buoyed by a substantial number of people from Juarez coming over to buy properties for security reasons, for fear of kidnappings, extortion, cartel violence," he said.

Already notorious for a spate of brutal murders of young women in the 1990s, Ciudad Juarez has become Mexico's most violent city in a drug war that has killed some 2,700 people nationwide so far this year. Some 3,000 troops were sent to the city of 1.5 million but they have failed to stop the chaos.

El Paso real estate brokers say demand from over the border began rising early this year as the drug violence flared, and has ballooned since then as murders, abductions, extortions and car theft have spiraled. Many Mexicans are even paying cash.

OVERWHELMING FEAR

"I had to get out. The violence, the fear is overwhelming," said Armando Garcia, 39, a computer programmer from Ciudad Juarez who has just obtained a three-year U.S. work visa and moved to El Paso to search for a one-bedroom apartment.

"I am renting until I find a place, I couldn't stay another day," said Garcia, who says several of his friends have faced extortion threats or been kidnapped.

Most of the Mexican buyers are families with young children. Many teachers and small business owners are opting to live in El Paso and put their kids in schools there while they cross back into Ciudad Juarez each day to go to work.

The Mexican demand is one factor helping El Paso resist the slump in the wider U.S. housing market. Homes across Texas are also maintaining their value better than most U.S. regions, in part because they did not climb as fast during the boom years.

In the second quarter of this year, Texas foreclosures starts -- the percentage of loans that entered the foreclosure process -- were 0.64 percent, well below the national average of 1.08 percent, according to the U.S. Mortgage Bankers Association.

Given the rampant violence in Ciudad Juarez, many residents have not waited to apply for U.S. residence visas, instead using their border tourist cards to cross the Rio Grande and buy properties.

That makes their residence technically illegal, but foreigners are not required to present immigration documents to buy a property in the state of Texas, brokers say.

"Some of the Mexican nationals who are buying properties have been understandably anxious to find a place quickly," said Dolores Guevara of DG Realty, who has received dozens of phone calls from Mexicans looking for homes since June.

The U.S. consulate in Ciudad Juarez said it has not seen a big increase in visa applications but declined to comment on whether U.S. authorities could take action against Mexicans living in El Paso without residency visas.

(Additional reporting and writing by Robin Emmott; Editing by Catherine Bremer and Kieran Murray)