Midyear Housing Market Update

Housing markets across the nation are experiencing a transition back toward the range of pre-pandemic levels for buyer demand and home sales. This transition is not a bad thing. The pandemic years were not sustainable. 

You may be wondering if now is a good time to act. As Central Texas' #1 independent brokerage, we obsess over keeping our clients informed. This is why we analyze the data, speak with experts, and curate content answering your most pressing questions. Keep reading as we break down mid-year projections and share what we are seeing in our local residential real estate market.

The San Antonio Board of REALTOR®’s June market report shows the following:

• New listings increased 21% to 5,399 listings compared to June 2021 and increased 16% as compared to May 2022
• Active listings increased52% to 7,721 listings as compared to June 2021 and increased 28% as compared to May 2022
• The months of inventory increased to 2.3, compared to 1.5 a year ago and 1.8 in May 2022.
• Pending sales declined 11% to 3,036  transactions as compared to June 2021
• Home sales declined 9% year over year to 3,674 as compared to June 2021
• The median sales price rose to $348,200, up 20% compared June of 2021
• Homes still sold quickly and spent an average of 29 days on the market, 3 days more than June of 2021

“People have internalized the narrative that the 2021 market was a normal market and many buyers may have lost hope. Frankly, the 2021 market was anything but normal and this transition signals that more hope for buyers is on the horizon.” George Ratiu, senior economist and manager of economic research at Realtor.com.

It’s easy to narrow in on the last two years as a reference point for your real estate expectations, but that zoomed-in view can be misleading. The best thing you can do is partner with an experienced local agent. The agents at Realty San Antonio know when to look at the big picture of where the market has been and they study where it is going.

Is active market inventory projected to continue increasing?

Yes. Experts at Realtor.com are projecting that active listings will continue to grow year-over-year as the inventory recovery accelerates in the second half of 2022. Americans have faced a whirlwind of changes so far this year and inflation has made a more significant and long-standing impact on real estate markets than was anticipated six months ago. These changes have allowed inventory to build. 

We are seeing this hold true in our local market.

This summer the number of homes for sale continues to grow in the San Antonio Metro.

The continued increase in inventory is great news for buyers because you now have more options in your home search. In our local market, new builds are still helping increase the number of available homes.

Rising mortgage rates impacted some homebuyers’ purchasing power in June, leading some buyers to walk away from deals. 

As bidding wars decrease and buyers have more breathing room, an increasing number of buyers are keeping (rather than waiving) inspection and appraisal contingencies. As buyers get a chance in the driver’s seat, these decisions could lead to more canceled deals if something doesn’t go right or if mortgage rates rise further. Buyers may want to consider a mortgage rate lock to protect them from rising interest rates as they search for a home. 

Are home prices going up or down?

Forbes reports that national home price growth is also beginning to decelerate.   

Ben Graboske, president of Black Knight, says that home prices would have to continue slowing at current rate for at least the next 12 months to return the housing market to a more normalized 3% to 5% national growth rate. Let’s take a look at home prices in San Antonio. 

The median home price for the month of June increased 20% year over year to $348,200 in San Antonio. In May, the median home price increased 24% year over year. In our local market, we are seeing the rate of home price appreciation slow as of June. 

“As the San Antonio housing market returns to a sense of normalcy, it’s important for buyers to work with an experienced agent to help them utilize their newfound bargaining power amidst increased inventory,” says Realty Austin Head of Sales Jolene Weinstein.

Pro-Tip: If you’re looking to sell your home in San Antonio, know that home price appreciation equals more equity in your home!

This growth in home equity helps sellers make a move up/down. According to the latest data from CoreLogic, the average homeowner gained $64,000 in home equity over the past 12 months. This equity could be some of what you need for a down payment on your next home. If you’re thinking about making a move, reach out to one of our local experts to find out how much equity you have in your home and how you can use it. Additionally, if you move soon, you’ll benefit from an increase in inventory and more homes to choose from.

Do price reductions indicate demand is weakening?

Somewhat. Pricing your home correctly is crucial when selling your home in order to reduce the likelihood that you’ll need to reduce the price. Additionally, price reductions are in part a response to the anomalous market of the past two years. 

To get a sense of demand, the primary number to watch here is the percent price decrease. Between 30-35% is normal in most markets, so if it’s nearing 40% or more, that could be a sign that demand is weakening. Active listings with price reductions are increasing in our metro. According to Altos Research, the 7 day average in San Antonio was 23% of listings with price reductions last summer as compared to 38% with price reductions in July 2022.

As a brokerage, we are also watching months of inventory and the number of days on the market (DOM) to inform our understanding of demand. When these metrics climb, there is a strong case for sellers to reduce their list price. In June, San Antonio’s months of inventory rose to 2.3, and the days on market rose to 29. Sellers are still seeing over asking price for their homes, but that percentage is decreasing each month. In June 2022, the original list price to sale price was 100.9%.

Pro Tip: Know how fast you’ll need to move. Keep an eye on DOM to understand how fast you'll need to move once you’re ready to make an offer. If properties are moving quickly, you’ll need to move fast. If DOM is flat or increasing, you may have more time. Of course, when working with an agent, they can guide you through this. 

Is San Antonio still a seller’s market?

Yes, but the market is shifting. The number to watch here is the Market Action Index as published by Altos Research. In our version, the blue portion is the current month, and the red portion is the previous month. It has been moving towards a buyer’s market more each month. This shows that the market is cooling. Sellers will want to work with a local expert to price their home right to get ahead of the curve.

San Antonio is a strong seller’s market shown in this data captured on July 21, 2022.

How does cooling buyer demand impact the rental market in San Antonio? 

The average rent in San Antonio continues to increase. The average price for a Single Family Residence (SFR) in San Antonio increased to $1,802/month in June 2022 vs. $1,603 in 2021 (an increase of 12%). We anticipate this will continue to increase as more buyers move to rent if they put their purchasing plans on pause.

The decision to rent or buy in San Antonio’s housing market is influenced further by significantly rising rents, climbing home prices, current interest rates, inflation, and more.

Where are mortgage rates headed?

Rates have climbed over 2% this year as a result of the Federal Reserve’s response to rising inflation. The U.S. Labor Department reported that inflation reached 9.1% in June, its highest rate in nearly 41 years. The Wall Street Journal predicts this inflation report will defend the Fed’s 0.75 anticipated point rate rise in late July. Bloomberg also reported two of the Fed’s policymakers agree with raising interest rates another 75 basis points in July to curb inflation.

In a recent MarketWatch article, Greg McBride, chief financial analyst at Bankrate, says what happens next depends a lot on inflation.“Until inflation peaks, mortgage rates won’t either.”

The Wall Street Journal reported that Fed Chairman Jerome Powell also stated the central bank wants to see clear evidence that price pressures are diminishing before slowing or suspending rate increases. Buyers could stand to save, and gain peace of mind, by considering a mortgage rate lock ahead of further increases. 

Pro Tip: If you can afford the payment, it’s a good idea to get into the market now rather than waiting for interest rates to lower. The longer you wait for interest rates to lower, the more equity you're losing as San Antonio homes tend to appreciate year over year. 

What does San Antonio’s job market tell us? 

The job market in San Antonio thrives in part because of its diverse and resilient economy, and also because of the talent pipeline as large companies continue to relocate and expand in Central Texas. 

“There may be fear that the economy is slowing, but the labor market is a point of strength,” said Daniel Zhao, senior economist at Glassdoor in an article by the Wall Street Journal. “While this job market does require looking with a careful eye, it remains healthy and does not look like a labor market on the edge of recession.”

CNBC reported payrolls increased 372,000 in June as the job market continues to defy recession fears. “Job growth was well above the consensus expectation, the unemployment rate held just above a decades-long low, and wage growth was solid,” wrote Gus Faucher, chief economist at PNC Financial Services Group. 

According to May 2022 unemployment data, San Antonio’s unemployment rate is 3.5%, which is lower than the historically low national average of 3.6%. A robust economy and low unemployment are attractors for people looking to move, so these numbers are a vote of confidence for San Antonio’s market.

No matter where you are in the home buying or selling journey, the best way to make informed decisions is to work with an experienced local agent who can explain current market data. As Central Texas’ #1 independent real estate brokerage, we are constantly studying market trends to help our clients make informed decisions, build their wealth, and prosper in the future.