San Antonio can be described as a dream city. A booming economy, no personal income tax, and incredibly affordable real estate prices made the San Antonio housing market one of the hottest in 2022. Here we’ll take a look at what the market was like in 2022, project what the near future holds for the real estate market, and look at why so many are moving to this Texan city.
Latest real estate market findings
The second quarter (April – June 2022) proved to be quite an exciting period. Home values in San Antonio have increased by 24.8 percent over the last year. In fact, the real estate market continuously broke records and established new all-time highs.
According to reports from the San Antonio Board of REALTORSⓇ (SABOR), the average home price exceeded $393,000 for the first time. Despite this development, San Antonio continues to be a very hot market due to the fact that the new record average home price is still incredibly affordable when compared to those of other popular cities. This is especially true when compared to the majority of the 10 largest cities in the United States.
The average number of days on market for Q2 closed at 29 days according to monthly reports compiled by SABOR. This clearly shows the strong interest in San Antonio’s housing market.
Current trends shaping the market
- Homes are selling for the listing price
Homes across San Antonio have been selling at almost 100% of their listing price despite the growth in median price. This speaks to the relative affordability and desirability of the area and the homes on the market, including luxury homes.
As such, buyers and investors will need to be strategic with their initial offers when buying property. It may be a strategy to bid slightly lower than the listed price, given the current climate of rising interest rates and a general cooling in the housing market across the country. However, the fact that homes in the San Antonio market in 2022 are still selling at the listed price or above, might mean that though lower than listed bids may be considered, they might not necessarily close the deal.
- Increasing mortgage rates are spurring investors to act early
Over the first six months of 2022, the average commitment rate on 30-year fixed-rate mortgages increased to 5.23 percent, which experts believe will rise as the year goes on. Higher mortgage rates have been moving investors to act sooner rather than later so they can take advantage of the current rates before any further increases.
Factors behind market movements
- The tech sector is rapidly growing, resulting in a wealth of career opportunities
Over the past few years, San Antonio has made the growth and development of its technology sector a priority. As a result, the tech industry has spurred a strong migration growth rate of 24 percent into San Antonio. In fact, nearly 47 percent of what are considered to be high-wage positions in the city’s economic development pipeline are directly related to IT and technology.
The number of people moving to San Antonio isn’t just restricted to those coming from other cities in Texas. A good percentage of people moving into the city actually come from out of state. According to a statement from Gilbert S. Gonzalez, CEO of SABOR, “… we have seen an influx of families and professionals moving in from states like Florida, California, and New York to invest in a future in the Alamo City”.
Not only are they attracted by the high-wage position available, but also by the relatively affordable real estate, lower cost of living, and the absence of income tax.
- The supply of homes available on the market lags behind the incredible demand
As of June 2022, the San Antonio housing market only had 2.3 months of inventory available to the public. This is undoubtedly one of the leading factors in the continued growth of home values and median prices in the city with buyers typically having to pay the listing price.
The city is well aware of the supply issue. As such, the city has emphasized the construction of new homes throughout San Antonio. However, the development has yet to make a significant impact on the growth of home values across the city—and experts do not believe that it will do so for the rest of 2022.
Forecast for the remainder of the year
- The interest rate hike by the Federal Reserve may cool off competition, but demand will stay high
The Federal Reserve recently implemented an interest rate hike to combat skyrocketing prices on goods and services throughout the country. For the most part, this has helped cool down the competition over the limited number of homes on the San Antonio market. However, this does not mean that the market has gone cold or is forecasted to go cold for the rest of 2022. On the contrary, the demand is expected to remain high.
The rate hikes may have forced a number of buyers to pause and carefully consider their finances. This is likely to affect first time buyers more than other demographics as they typically are not yet at the height of their earning power, and are more likely to be starting a family or already raising one. This is good news for buyers who are in a financially strong position, such as young professionals, people looking to buy a second home, or those looking to relocate when they retire, as they will likely meet less competition for a property.
Although experts predict that the San Antonio housing market will see fewer bids in the latter quarter of 2022, they do say that this can also be seen as a positive for sellers. In the face of a rate hike, a smaller number of buyers means better quality leads, which for a seller means a quicker sale at a better price.
- Home values will continue to rise
The home values within San Antonio have risen every year for the last ten consecutive years. Experts predict that this will not change anytime soon. Again, this is a basic consequence of supply and demand. With only a few months of inventory available to buyers and investors, the lack of supply coupled with the significant interest in the San Antonio real estate market will keep driving home values up.
Investors and sellers, however, should take note that experts anticipate the rate of home value appreciation to be slower than in recent years due to the uncertainty brought about by the rate hikes. This does not mean that their equity in their homes will become negative, far from it, just that the price increase will not be as meteoric as in the last couple of years.
- Rent rates will continue to grow, making investment properties a hot commodity
Rent as a whole is up by roughly 12 percent in the last 12 months. The increase can easily be attributed to buyers who were forced into the rental market, by the spiraling costs of the property. Experts see no reason why the rental market should decline for the rest of 2022 going into 2023. In fact, some experts even predict that rental rates will grow at an even faster pace than seen in the last few months.
- Rental Properties
The San Antonio rental market has been especially resilient despite everything that has happened since the onset of the pandemic. In fact, San Antonio has been ranked as one of the best cities for renters in the entire United States.
The median rent for a three-bedroom home hit $1,763 in June 2022, representing a year-on-year increase of 12 percent. Over the past three years, the median rent for these types of homes increased by 26 percent.
The strong performance of the rental market in San Antonio should be incredibly encouraging for property investors, especially those looking to rent out three-bedroom homes to families. Savvy investors may wish to focus their attention on luxury homes in King William and Downtown San Antonio, as these neighborhoods have an average rent between $3,000 to $4,500 per month.
San Antonio neighborhoods to live or invest in
Terrel Hills is considered one of the best places to live in San Antonio. Located just five miles away from Downtown, the neighborhood has a number of gorgeous historic homes and remodeled Mid-century homes that attract families, young adults, and retirees alike. Getting around is also easy as residents have access to all the main highways.
Alamo Heights is one of the best neighborhoods for families, particularly those who enjoy the outdoors. The area has various parks and outdoor attractions, including the San Antonio Zoo and the San Antonio Botanical Garden. There are also a number of family-friendly restaurants and family-oriented recreational spots in the area. Alamo Heights is considered one of the safest neighborhoods in San Antonio.
Oakland Estates offers residents a fantastic mix of urban and suburban living. The neighborhood itself is a tight-knit community, providing a good “small-town feel”, while offering residents convenient access to Downtown, which is only a 20-minute drive down the I-10. Oakland Estates is known as a great place for first-time homebuyers.
Lavaca is well-known for its friendly residents and community events. Residents of this downtown neighborhood regularly host a Block Party in October, as well as a neighborhood Potluck Dinner in January. It also offers a great place for shopping, dining, and nightlife. All this makes the neighborhood an excellent option for young professionals looking to either rent or buy.
King William is one of the more historically rich neighborhoods in the city, with a number of historic luxury homes present in the area. The neighborhood is located very close to the River Walk, one of San Antonio’s biggest green spaces and attractions. A quiet and safe community, King William is a neighborhood that best suits families with slightly older children.
What makes San Antonio a great location to live or invest in?
Apart from a great selection of affordable homes that are likely to increase in value and also offer great rental opportunities, there are other factors that would interest home buyers and investors:
San Antonio has a very low cost of living
San Antonio is regularly listed as one of the most affordable places to live in Texas, easily beating other popular cities like Austin or Dallas. In fact, the cost of living in San Antonio is one of the lowest in the entire United States, coming in at 14 percent below the national average.
The city is regularly named one of the “Best Cities to Raise a Family”
One of the great things about living in San Antonio is that it offers all the modern comforts and conveniences of a major U.S. city, while still providing a friendly, small-town feel. This, combined with the many parks, public transportation options, and fantastic schools, is why San Antonio is often considered one of the best cities to raise a family in Texas. In fact, San Antonio was even named the 5th Best City in the United States to Raise a Family by Homes.com in 2018.
The city is home to great colleges and universities
San Antonio’s school system is incredibly diverse. The city is home to some prominent Texan colleges and universities, including Saint Mary’s University, the University of Texas-San Antonio, and Texas A&M San Antonio,. The college system in San Antonio has educated a number of celebrities and prominent politicians, including Travis Scott, David Robinson, and Senator John Cornyn.
The city is steeped in history
There is no shortage of historical sites throughout San Antonio. The most notable, of course, is the Alamo, from which the city takes its nickname, The Alamo City. The Alamo’s silhouette is a symbol of pride for San Antonio and is a monument to the bravery and resiliency of the city. In addition, San Antonio is home to the San Antonio Riverwalk, the McNay Art Museum, and the San Antonio Missions National Historical Park, just to name a few.
Find the perfect home and experience San Antonio, TX for yourself
With a favorable real estate market that is predicted to remain strong and a low cost of living, San Antonio is a contender as one of the best places to buy a home. This applies to all age groups, from young first-time buyers or retirees, and everything in between. If you are ready to find your home in Alamo City, get in touch with trusted real estate agents like Robert Elder and Stephanie Paxton of RoPax Realty Group.
Robert and Stephanie are among the most respected real estate agents in San Antonio, with a combined 38 years of experience. Together, they have led RoPax Realty Group in the closing of over 2,500 real estate transactions equating to well over $400 million in sales.
You can reach the RoPax Realty Group by calling 210.260.0682 (Robert) or 210.325.9595 (Stephanie). Alternatively, you can send any questions or inquiries you may have to either email@example.com or firstname.lastname@example.org.