San Antonio’s Housing Market: Crash or Soft Landing?

Google searches related to the phrase “housing market crash” are up dramatically. People can sense the market is moving, and it is. Demand has plateaued as fewer homes are going under contract and closing. This shift indicates we are moving toward a more ‘normal’ market. If demand doesn’t return soon, we may head into a strong buyer’s market. 

Here are some of the metrics we are tracking:

• Mortgage and inflation rates started to ease in July 
• We are rapidly shifting from a strong seller’s market toward a more balanced market
• Multiple offers are less common, but homes that are priced right are still selling quickly
• Price reductions are slowing as sellers get more serious about pricing competitively 
• On average, homes sold for less than their listed price for the first time this year
• Home prices have started to slowly come down.  The median sales price in July was $341,600

Will San Antonio see a local housing market crash?

After two years of unprecedented growth for the San Antonio housing market, the rapid shift and cooling demand we saw this year as a result of rising rates and other factors have made many people begin to wonder if our local market is going to crash. As we head into August looking at the last few weeks, demand has plateaued as less homes are going under contract and closing. This shift in demand feels like we are currently in more of a soft landing state. 

This period of comparable cooling still has our market experiencing double-digit appreciation compared to last year. We can’t see into the future, but we can keep you informed with what experts are saying. 

Fitch Ratings, one of the top three credit ranking agencies internationally, released a recent report that points to more price corrections as opposed to a crash.

According to the report, Fitch “expects that home price growth will continue to grow, albeit more slowly, for 2ndQuarter 2022 due to the home price data lag and mortgage lock-in effect.”

“Despite the prospects of a home price correction, Fitch deems a housing market crash akin to the Great Financial Crisis highly unlikely,” said the report. “The main reasons are because housing inventory is still constrained, and existing homeowners who have benefited from low mortgage rates are unlikely to sell their properties.”

For another perspective, JPMorgan CEO Jamie Dimon predicted the chance for the U.S. economy to have a "soft landing" to be around 10% and the probability of a "harder landing" or "mild recession" to be closer to 20-30%. There's also a 20-30% chance of a "harder recession" and a 20-30% chance of "something worse," Dimon said, according to Business Insider.

July 2022 San Antonio Housing Market Statistics

The San Antonio Board of REALTOR®’s July data shows:

• New listings increased 5% to 5,114  listings compared to July 2021 and decreased  5% as compared to June 2022
• Active listings increased 57% to 9,068 listings as compared to July 2021 and increased 17% as compared to June 2022
• The months of housing inventory increased to 2.7, compared to 1.7 a year ago and 2.3 in June 2022.
• Pending sales declined 12% to 2,856 transactions as compared to July 2021
• Home sales declined 15% year over year to 3,333 as compared to July 2021
• The average sales price declined 2% compared to June 2022 to $389,000, up 12% compared July of 2021 
• Homes still sold quickly and spent an average of 27 days on the market, 2 less than the previous month 

Despite worries of a housing market crash for San Antonio’s reportedly overvalued market, we’re only now seeing a slight drop in the median sales price for July.  As buyers adjust to the new elevated interest rate environment, the current market has more in common with the market of 2019 than the past two years. A recent article by The San Antonio Report says that despite being considered overvalued by some economists, the price decreases that the market will start to see are expected to be slight — this is true for July. 

Is housing inventory continuing to build?

Yes! We’re tracking active, new, and pending listings weekly and sharing them across our social media channels to keep you informed. In 2022, we’ve seen the supply of available housing continue to build. After the high demand and low inventory levels San Antonio experienced during the pandemic, this increase in inventory is a sign that we are moving toward a more balanced market. 

Are home prices dropping in San Antonio?

After a period of explosive growth, when it comes to median sales price for homes in the San Antonio housing market combined with rising mortgage rates and inflation, it makes sense that buyers want to know if home prices will come down. Likewise, sellers who witnessed homes go for over the asking price and have multiple bids want to know if they missed the chance to sell at the top of the market.

When compared month to month this year, the answer is yes. The median sales price leveled off at $348,000 in May and June as buyers had to rethink their next steps when faced with a shifting market. But, the housing market crash that many expected hasn’t happened. 

Instead, the median sales price has started to drop in July, but it isn’t a dramatic drop. On top of that, those numbers appreciated compared to the same time in 2021. While we might not see that level of appreciation that houses in San Antonio experienced the last two years, home prices are still higher than if you bought or sold this time last year. 

Are we seeing more price reductions?

Weekly they are reducing as sellers get more focused on pricing their homes appropriately. They are higher than previous years, meaning buyers will find less competition and have an opportunity to find properties that have gone down in price from the time they were listed. You can search for specific properties with price reductions here. 

Is demand still high for homes in San Antonio? 

The increase in mortgage rates and inflation had many buyers hitting pause to regroup and decide when they wanted to move forward with buying a home. As a brokerage, some of the data points we study are months of inventory and the number of days on the market (DOM) to inform our understanding of demand. When these numbers increase, it is a sign that demand is weakening. This isn’t necessarily a bad thing, it just means that our market is moving more toward a buyer’s market.

Additionally, the sold price compared to the original listing price dropped in July compared to June, coming in at 99.6%. This illustrates that there will likely be fewer bidding wars raising offers over asking price, so it’s important to work with an expert to price your home appropriately for the largest return. 

In July, San Antonio’s months of inventory rose to 2.6, and the days on market rose to 27. That said, in July and moving into the beginning of August, we’re seeing a dip in some of those factors that caused buyers to pull back. 

What’s happening with mortgage rates?

According to The Business Journals, housing economists predict that mortgage interest rates are likely to level off despite the Federal Reserve’s interest-rate hikes. We’re seeing that this is true already. According to The Washington Post, mortgage rates declined in July. Though they are still high compared to this time last year, those rates during the pandemic were artificially low.

Additionally, The New York Times reported that inflation moderated in July, which caused stocks to rise and the Nasdaq Composite Index moved back into bull territory and out of the bear market that it has been in.

Is San Antonio a buyer’s market?

San Antonio’s housing market experienced a strong seller’s market during the majority of the pandemic, but we’re rapidly moving toward a buyer’s market. When we released our Midyear Market Update, the Market Action Index was at 60 compared to today at 53. This is good news for buyers who have been waiting for a more balanced market to act, and you’ll likely find you have more negotiating room. 

If you want to take advantage of mortgage rates and inflation moderating, we spoke to financial experts about a variety of creative financing options that you may not have considered to make homeownership a reality. 

No matter where you are in the home buying or selling journey, working with an experienced local agent as the market changes is the best way to ensure you’re informed and ready to act. 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. 

Follow us on social media for breaking market updates, graphics, videos, and more @realtysanantonio, and subscribe to our market newsletter by clicking sign up in the top right corner of our website.