SAN ANTONIO – If it feels as though San Antonio’s housing market is at an unpredictable point, you’re not alone: Real estate experts appear just as uncertain about where things might be headed.
“You’re trying to figure out what’s going on,” said Lawrence Dean, an analyst with Zonda Home, a provider of research and related support for the homebuilding and housing sectors. “And so are we.”
Dean delivered that quip at the Greater San Antonio Builders Association on August 9, before an audience of developers, builders, brokers and other analysts attending Zonda’s second quarter recap of San Antonio’s housing market.
Uncertainties aside, Dean also made clear that recent surges in pricing are contributing to a slowdown in the pace and competitiveness of home sales in the San Antonio region, and developers are responding in kind; according to a recent Zonda survey of homebuilders in San Antonio, 87% stated they plan on slowing down housing starts, citing weak sales activity and too much inventory.
“This pause will let us assess the market,” one unnamed builder said in the Zonda report.
The second quarter of 2022 saw 23,723 housing starts over the past 12 months, a 26% year-over-year increase. It anticipates that this number will begin declining for the first time since the pandemic began later this year, predicting 19,500 starts for 2023.
Among the Zonda survey respondents, 20% of builders who steadily increased their home prices over the last year have started decreasing them, while the lion’s share of builders – 71% – have halted increases but have not decreased prices.
Mortgage rates are up 66% since January – their highest point in the past 10 years, Dean noted. Prices for new homes in the region have also gone up 7% over that same time span. The combination has equated to a $529 increase in the monthly mortgage payments for the average San Antonio homebuyer, compared to what they would have been required to pay if they purchased their home six months earlier, according to the Zonda report.
Those inflationary pressures appear to be dampening demand, with over 50% of builders saying sales are slower than they anticipated. Dean noted that cancellations increased at a peak 50% in June, compared to cancellation increases below 10% in January 2021. Since the end of the first quarter, San Antonio’s housing inventory has increased from 0.9 months of supply to 1.3 months of supply.
Editor’s note: This story was published through a partnership between KSAT and the San Antonio Business Journal.