Writer: Jerrica DuBois
4 min read September 2023 — The real estate market has been challenging, at best, for the past few years. Topsy-turvey interest rates and inventory challenges sparked price increases across the country for homebuyers and renters alike. But Alamo City is showing some signs of a turnaround, hopefully making its way to the wallets of residents.
According to Redfin, San Antonio is one of only nine metro areas that saw a decline in median home sale price in August 2023 year over year — dropping 1% in that period. Austin topped the list with a decline of 6% in median home sale price. There’s also good news for renters, as occupancy rates in San Antonio reached their lowest point in a decade at 88.2%. San Antonio’s apartment stock is also expected to increase with a historic apartment construction pipeline, as well as the natural cycle of slowed rental activity in the fall and winter.
As this possible shift in the market looms, Invest: caught up with leaders in the sector to discuss real estate challenges and the current state of the industry.
What is the state of the real estate market and what are the challenges the industry is facing?
Erin Cestero, President of San Antonio Division, JBGoodwin Realtors: Although the fact that there is no state income tax brings people to San Antonio along with our booming economy, property taxes can be a challenge. We have to work hard to help people moving in to understand our property taxes and how much they adjust with market value and in different areas of our market. Some people might be hesitant, especially retirees, but will really benefit from our new homestead exemption legislation in the works.
One of the greater challenges came from the fact that builders couldn’t build fast enough during the pandemic and as the overall market has slowed, those builders kept up a strong pace. Therefore, in those segments of San Antonio and surrounding areas where construction is prevalent, we are seeing a great deal of inventory build up. For instance, out in the west part of the city, a seller who needs to sell is now competing against builders offering reduced interest rates and major incentives. As REALTORS®, we have to work very hard to prepare our clients for the market to stay competitive.
Tim Brown, Broker & Owner, RE/MAX Corridor: The market has become more challenging with sales down and interest rates up due to which people are hesitant to act, especially in the residential sector. Sellers often have unrealistic expectations based on past sales but the current market conditions may not support the same price levels. This disconnect can create difficulties in negotiations and impact the overall market dynamics. Still, it’s worth noting that these challenges are not isolated to this period as we saw similar trends in the early 2000s and during the recession of 2008-2009.
While commercial sales have also slowed down, that segment has not been as impacted by interest rate fluctuations. The commercial market is more focused on finding the right opportunities to make profitable investments. Therefore, in the pockets surrounding the region we have noticed a slight increase in inventory compared to the critically low levels seen in 2021 and 2022. However, it is important to note that inventory is still relatively low compared to what is considered normal for the area. Encouragingly, one significant trend we’ve observed is that builders have picked up their pace in constructing new homes, leading to a rise in new home inventories. However, these new homes are taking longer to sell, prompting builders to offer attractive incentives to real estate agents to move the inventory.
Lastly, we are currently witnessing a trend of more and more people relocating to Texas and other regions due to remote work and affordable alternatives, and this shift in preferences and financial considerations is contributing to the complexity of the current real estate market.
Pete Alanis, Executive Director, San Antonio Housing Trust: When examining the housing landscape, our approach is holistic, viewing it as a comprehensive system. A thriving housing system is characterized by a community having a delicate balance between supply and demand of housing for its residents. This is difficult to achieve under average conditions. However, our system is, and has been, out of balance primarily due to a significant migration influx into and throughout Texas, including San Antonio. Notably, regions like Austin have demonstrated proficiency in crafting affordable housing initiatives and increasing resources, yet most communities can’t keep up with the immense demand that has led to substantial rent escalation, thereby challenging overall affordability.
Consequently, individuals are left with the unfortunate decisions of paying more to stay in their communities or, regrettably, seeking more economical alternatives outside their present neighborhoods, if there are any. This phenomenon has spurred displacement and heightened the negative effects of gentrification, significantly impacting the equilibrium between supply and demand a healthy community needs. In light of these prevalent trends, we remain keenly aware of the need for strategic collaborations, such as those with the Housing Trust and other public partners. These collaborations play a pivotal role in addressing the intricate interplay between supply and demand, with the ultimate goal of fostering a more balanced and equitable housing market.
For more information, please visit:
https://www.remax.com/real-estate-offices/remax-corridor-schertz-tx/100424297
