I attended the San Antonio Board of Realtors’ annual Housing Forecast on Jan. 5 to hear what may be in store for us in the coming year. We heard from County Judge Nelson Wolff and Mayor Julian Castro. Both had lots of positive things to say about San Antonio and what’s happening in and around the city. Mayor Castro called this the Decade of Downtown. Lots of development happening in the downtown and surrounding areas, in residential and commercial. San Antonio has a growing young urban population who want to live near the urban center of town and want to be able to work and play nearby.
We also heard from the current and immediate past Presidents of the Greater San Antonio Builders’ Association. Both shared that they expect housing starts to tick upward in 2012, although not to the levels we saw in years past. Builders are seeing a lot of activity in the higher-end price ranges and in areas farther out, since many of the neighborhoods closer in to 1604 are built out and fewer lots are available. Their development costs to bring new lots online have increased also and some of those increases are being passed along in the price of houses. They said that they were finding it a little easier to obtain financing for spec houses than they’ve seen in the last few years.
San Antonio’s number of sales and median price has seen a slight increase in 2011 and we expect that to continue into 2012.
There is one part of the residential market that has seen dramatic increases and those increases are expected to continue through 2012 and likely beyond–the rental market. There are several reasons for that increase. Mortgage lending requirements continue to be strict and are making it difficult for first-time buyers to qualify for the loan they need to purchase a home. Uncertainty in the job market may also be keeping some folks from making the commitment to buy a home. For these reasons and other personal considerations, many are choosing to rent for now. So what does that mean? It’s a great time to invest in rental housing! If you are looking for a place to invest that provides tax advantages and where your money can grow and the value of your investment will appreciate, and the cost of acquisition (mortgage rates) is at historic lows, this is the time to buy!
Our other speaker, economist Dr. Jim Gaines from the Real Estate Center at Texas A&M, shared some stats with us and confirmed that Texas is the #1 state for job growth. He also showed us some numbers and graphics that demonstrated the growth of urban areas in the state–the triangle that includes Dallas/Ft.Worth, Houston, Austin, and San Antonio. That’s where the population is going and that’s where the growth is. Texas has changed over the last 10-20 years from a rural state into a young urban state. We have a large percentage of immigrant population, primarily Hispanic, who bring their own vibrancy to our cities.
One thing we hear about in the media is the looming “shadow inventory” of foreclosed homes that are poised to hit the market. We are expecting some of that here and when those homes do come on the market, they will put downward pressure on home prices and home values in the neighborhoods they’re in. Thankfully, we don’t have the volume to deal with that other areas do, and we hope those homes will sell quickly when they do enter the market, but sellers will have to deal with the effects for awhile.
Dr. Gaines did also point out that for all the job growth and other positive indicators in Texas and San Antonio, we are not immune to the national and international economic trends. He also stated that many economic factors are going nowhere until after the Presidential elections. Everyone is waiting to see what’s going to happen before they make major moves to expand, hire, move, etc. So, expect 2012 to be mostly more of the same from 2011, with slight increases. Texas and SanAntonio have been fortunate to not have experienced the high highs followed by the low lows that other areas of the country have seen. We are slow and steady and we are doing fine!
Here’s to a great 2012!