State of the Market Report: San Antonio
San Antonio, like other robust markets across Texas, keeps bringing the heat. With rental rates increasing the continued economic growth, San Antonio single-family starts increased 10.2% year-over-year, with an increase of 858 units.
Unemployment decreased a full percent year-over-year in San Antonio, and job growth is expected to continue in 2015, despite concerns over the drop in oil prices (which may become a more pressing economic issue state-wide). The Trade/transportation/utilities industries added +6,500 jobs in 2014 (the most of any industry in the market), followed by the business services industry (+4,800 jobs).
“While inventory levels remained healthy throughout 2014, this is a warning sign of a push into higher price points with lot inventory at its lowest since 2007. The affordability factor that has fueled much of the San Antonio market is quickly disappearing. Only 35% of all new housing starts were priced below $200,000 in 2014 down from 43% the previous year. Meanwhile the $300,000 to $500,000 price segment grew from 21% of the market share to 24%. A very good year in 2014 for new homes should continue this year, but mainly for homes priced above $200,000.”
“The evaluation of new home activity by price range shows that the San Antonio market continues to lose its affordable advantage, now with only 35% of all new housing starts priced below $200,000. Last year, new construction activity priced below $200,000 was 43% of all new home activity. The $300,000-$500,000 segment maintains a robust growth pace, increasing its market share from 21% to 24% over the last twelve months.”
“Where prospects for 2015 housing production is concerned, the big question will be how long can we continue to generate increases in starts priced greater than $250,000 in numbers that can continue to overcome the loss of the under $200,000 product.”
“Lot production has averaged 9,000 per year over the last two years and that facilitated the increase in housing starts in 2014. Lot delivery should increase in 2015 giving us plenty of lots to build on but most of those will be for the $200,000+ markets.”
Much like the Austin market, San Antonio’s closings in the fourth quarter were dominated by DR Horton, Pulte, and KB Home, accounting for nearly half of the market share.
