Experts See Hot Home Sales Again

Fortune magazine reports San Antonio as the nation’s leading real estate market.
RISMedia
San Antonio's real estate industry just ended a remarkable year, with record-shattering home sales, new housing construction starts and plentiful, affordable inventory that bode well for the new year, experts at the 2006 annual Housing Forecast said this week.

The experts touted a recent Fortune magazine report that rated San Antonio the No. 1 residential real estate market in the country, with a projected 8.3 percent appreciation rate in 2006.

That's not as strong as the double-digit annual appreciation rates that homeowners in California, Florida and Northeast markets have been experiencing over the past six years, but those markets are expected to weaken.

"The growth of the real estate market can be shown across the city, in all neighborhoods," said Barbara Tarin, chairwoman of the San Antonio Board of Realtors.

"With a median price appreciation of 22 percent over three years, San Antonio has become known for its stability. It's made us the hottest real estate market in the nation." All the economic indicators are signaling another strong, record-breaking year, said Jack Inselmann, vice president for the Central U.S. division of Metrostudy, a market research company.

Inselmann said the combination of improved job growth and increased demand for houses was key to the industry's success in 2005.

Barring unforeseen events, he projected continued vibrant job growth and housing demand in 2006.
"These are the best of times for the San Antonio housing market," Inselmann said. "We are on the threshold of our best economy ever, and that, in turn, is the primary reason for grand expectations for our housing market over the next couple of years. San Antonio is turning into a big city and all the greatness that goes along with it."

Single-family housing construction starts were up 27 percent, from 12,838 in 2004 to 16,340 in 2005, he said.

Admittedly bullish on San Antonio, Inselmann predicted a 10 percent growth in housing starts in 2006 over last year, up to 18,000.

Sales of homes jumped more than 12 percent, from 19,523 in 2004 to 22,000 last year.

The average price of a home was $158,000 in 2005, a 9.7 percent increase from $144,000 in 2004.

Dollar value increased from $2.8 billion in 2004 to $3.5 billion in 2005.

The city's median house price of $134,000 in 2005 was 40 percent below the national median average, said Tarin of the Board of Realtors.

The largest number of home sales, or 24.8 percent of all sales last year, was in the $100,000 to $140,000 range, she said.

San Antonio home appreciation has been modest and steady in recent years, luring buyers from California and Florida who can no longer afford or don't want to pay high prices for houses of similar size, age and condition.

Tarin said 13 percent of San Antonio sales last year were to second-home buyers looking for solid investments.

"The outlook is strong for San Antonio and all major metro areas in Texas," Tarin said. "If 2006 doesn't break records here, it will be the second-strongest year we've seen." The industry is prepared for increased demand, Inselmann said.
The available inventory of finished vacant houses, an indicator of consumer demand, is a 1.2-month supply, the same as a year ago, Inselmann said.

There were 5,900 houses under construction at the end of 2005. And there were 17,274 vacant developed lots at year's end, an increase of 1,478 lots over 2004.

The local housing market has become increasingly robust over the past decade, Inselmann said.
There were about 10 major developers building houses in the San Antonio area in the mid-1990s, but there are at least 30 dominating the market today, Inselmann said.

"Builders are talking big. They all said they will build more houses in early 2006 than in early 2005," Inselmann said. "You don't have to worry that 2006 will be a good, strong market. But expect it to be a highly competitive market."