The increasing lack of homes for sale in San Antonio for less than $200,000 is likely to cause increasing disruption in the local real estate market in 2019, pushing would-be first time home buyers more and more into the new apartment complexes which are springing up around the city, News Radio 1200 WOAI reports.
"We probably enough houses, but we have them in the wrong price ranges," said Bob Jacobs, broker owner at RE/MAX Associates and a former President of the San Antonio Board of Realtors. We are quickly putting our inventory into markets where not all the buyers are, or where all the people who need homes are."
Jacobs points out that as recently as 2015, more than half of all homes sold in metro San Antonio sold for less than $200,000. Last month, that figure was 39% and falling.
And he says even for lower priced homes, another factor is disrupting the market.
"We have institutional buyers, large buyers, who are buying up lower value homes, fixing them up, and holding them in inventory for rental."
Throughout the eighties and nineties and into the 2000s, a steady stream of affordable, high quality homes from builders like Ray Ellison helped keep San Antonio hosing prices low, and that affordability was one of the large magnets attracting new employers in multiple industries to San Antonio.
So what happened?
"The cost of development, government regulation onto development, as well as the building costs, make it prohibitive to build a home at that price point," he said.
There are also factors like the lack of any land for subdividing close to the city, and an increasing lack of skilled workers to build homes requires homebuilders to pay more, a problem which was made even worse when Hurricane Harvey prompted a major exodus of skilled craftsmen to the Houston and Coastal Bend areas.
He says the result of this price appreciation is beginning to show up in market figures. Since fewer families are able to afford a home, the total number of homes being sold in San Antonio has begun to fall, for the first time in several years.
Jacobs points out that the 2252 closed transaction in the metro so far this year is down more than 3% from last year.
He says other factors are impeding first time homebuyers, including the fact that people in their early thirties, the 'sweet spot' for buying a first home, are increasingly saddled with student loan debt, and Millennials have worked essentially all of their adult lives in a job market which is stagnant for pay increases in many fields.
On top of that, Jacobs says, is rising interest rates, which make homes more unaffordable.
"We have a whole generation of home buyers who are used to something around the three percent range for mortgages," he said. "They see that as a big stopping point, rising interest rates."
This will play out in several ways for the local real estate industry in the coming year, Jacobs says.Fewer affordable homes will push more lower income and first time buyers into apartments, or force them to buy homes further and further from the city, which will increase highway congestion and further worsen the city's clean air problem.
He says increased gentrification will lead to higher home values, which will affect home owners through higher property taxes.
And he says if this situation continues, it will affect the long term prospects of the young people who will not be able to afford that first home, and the subsequent homes which generally follow.
"The average person in a rental situation has a net worth of about $5,000," he said. "The average net worth of someone who owns a home across the United States is about twenty times that."