The San Antonio Real Estate Market: A Smart Investment in 2020?

San Antonio will be a seller’s market in 2020, according to the San Antonio Board of Realtors. But it’s not just real estate agents claiming the housing market in San Antonio is hot. Both Forbes and Curbed also list the San Antonio metro area as one of the best real estate markets in the U.S. this year.

Located in South Central Texas, San Antonio is about a one hour drive from Austin and three hours from Houston. Originally founded as a Spanish colonial outpost back in 1718 and home to The Alamo, the city has rapidly grown over the past few decades.

San Antonio sits at the southwestern corner of the Texas Triangle, an urban megaregion consisting of the San Antonio, Austin, and New Braunfels metropolitan areas. The economy in the region is as diverse as the city is old, with the manufacturing, military and defense, health care, financial services, and oil and gas sectors helping to keep job growth strong and rental property in demand.

Here’s why the San Antonio real estate market just might continue to be one of the smartest places to invest in 2020.

>>Explore Roofstock's San Antonio Investment Properties here.

 

Population Growth

According to local news station KENS 5 the Alamo City is going “boom” thanks to the population explosion in San Antonio. An average of 66 people are moving to the metropolitan area each day, making San Antonio one of the fastest-growing cities in the U.S.

Key Population Stats:

  • City of San Antonio is home to more than 1.5 million residents with more than 2.5 million people living in the metropolitan area.
  • San Antonio is the 2nd most populated city in Texas and the Southern U.S.
  • San Antonio-New Braunfels metropolitan area consists of Bexar County (where San Antonio is located), Medina and Comal counties.
  • Bexar County is projected to be one of the five fastest-growing counties in Texas, with more than 1.6 million new people moving to the area by 2050.
  • Median age in San Antonio is 33.3 years.

 

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Job Market

San Antonio has been called an “overachiever” when it comes to job growth, consistently outperforming the U.S. average over the last several years. In fact, the Federal Reserve Bank of Dallas reports that the San Antonio Business-Cycle Index expanded at its fastest rate since 2016, with job growth surging despite a tight labor market.

Key Employment Stats:

  • GDP of San Antonio-New Braunfels MSA is more than $133.6 billion, according to the Federal Reserve Bank of St. Louis, and has grown by more than 61% since 2010.
  • Job growth in San Antonio last year was 1.7%.
  • Texas and San Antonio are projected to see more economic growth in 2020, with San Antonio outpacing job gains in the entire state last year.
  • Unemployment rate in San Antonio is 2.8% and approaching a 20-year low.
  • Target industry sectors in San Antonio include information technology and cybersecurity, new energy, life science and healthcare, aerospace and aviation, military and defense, financial services, and advanced manufacturing.
  • Port San Antonio is a 1,900-acre technology and innovation campus just southwest of Downtown San Antonio.
  • H-E-B supermarket chain, financial services and insurance company USAA, Rackspace, CPS Energy, Toyota Motor Manufacturing, Valero Energy, and Clear Channel Communications are just a few of the companies with corporate headquarters in San Antonio.
  • Major employers in the San Antonio region include Lackland Air Force Base, Fort Sam Houston-U.S. Army Base, H-E-B, USAA, Methodist Healthcare System, City of San Antonio, Wells Fargo, JP Morgan Chase, and Bill Miller BBQ.
  • The San Antonio area is home to 15 colleges and universities with a total student population of more than 160,000, including Texas State University, Texas A&M University-San Antonio, and the Alamo Community College District.  
  • 82% of San Antonio residents have a high school degree or higher, while 25.9% hold a bachelor’s degree or advanced degree.
  • Several interstate highways serve the San Antonio region, including I-10, I-35, and I-37.
  • Union Pacific Railroad provides freight rail service in San Antonio.
  • San Antonio International Airport (SAT) provided service to more than 10.3 million passengers last year and moved more than 277 million pounds of air cargo, setting a 10-year record.

 

Real Estate Market

Curbed lists San Antonio as one of the top 5 cities where homes could make a good investment in 2020. The real estate and urban design blog network notes that San Antonio is often overlooked, even though single-family home prices here climbed 8.9% over the past year.

New construction is on overdrive in the metro area, but there’s still not enough supply to meet the demand for housing. The San Antonio Express-News reports that although builders could begin work on nearly 15,000 new homes this year, demand still far outpaces supply.

Key Market Stats:

  • The median listing price of a house in San Antonio is $235,650 according to Zillow (as of January 2020).
  • Homes in San Antonio are selling for about 98% of the asking price, according to the San Antonio Board of Realtors MLS (as of January 2020).
  • Square foot listing price in San Antonio is $124 vs. $131 per square foot in the San Antonio-New Braunfels metropolitan area.
  • Home values in San Antonio increased by 4.5% last year and by more than 55% since February 2012 based on the Zillow Home Value Index.
  • Average days on market is 84.
  • During the listing period 18.9% of the houses for sale in San Antonio have a reduction to the listing price.
  • 1.6% of the homes in San Antonio have a delinquent mortgage vs. 1.1% U.S. average.
  • Jefferson-Woodlawn Lake is the neighborhood in San Antonio with the highest home values, while Loma Park has homes with the lowest values in San Antonio.



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Strong Renters’ Market

In a recent article from Forbes, “How Best To Invest In Texas Real Estate In 2020”, San Antonio is ranked as the 3rd best Texas market for real estate investors. Reasons why San Antonio ranks so high on the list include strong job growth and rising home prices. 

The price/rent ratio of 21 in San Antonio also puts the market here high on the list for rental property investors. Generally speaking, markets with a price/rent ratio of less than 15 are more favorable for buying a home, while price/rent ratios of 16 or higher indicate it’s better to rent than own.

Key Market Stats:

  • Median rent in San Antonio is $1,384 per month vs. $1,472 per month for the San Antonio-New Braunfels metropolitan area.
  • Rents in San Antonio increased by an average of 2% over the past year, according to RENTCafé.
  • 46% of the housing units in San Antonio rent for between $701 and $1,000 per month, while 44% rent for more than $1,001 per month.
  • Just over 45% of the households in San Antonio are renter-occupied.
  • Neighborhoods in San Antonio with the lowest rents include University Park, Woodlawn Hills, and Kirby where monthly rents average about $751.
  • Neighborhoods in San Antonio with the highest rents include Dignowity Hill, Cedar Creek, and Government Hill where average rents range from between $1,529 and $1,703 per month.



Historic Price Changes & Housing Affordability

Long-term real estate investors look for property that appreciates in value over time while generating consistent cash flow during the holding period. 

Analyzing the historic change in housing prices can provide an indication of potential future value increases, while the affordability of housing is one indicator of the demand for rental property.

Each quarter the FHA releases up-to-date data on the change in home prices for all markets across the U.S. The most recent FHA 2019 Q3 House Price Index report for the San Antonio-New Braunfels MSA shows:

  • Since Q1 1991 homes prices have increased by 224.53% 
  • Over the past five years home prices have increased in San Antonio by 36.93%
  • Over the past year prices have increased by 5.72%
  • Over the last quarter home prices in San Antonio have increased by 0.15%

The Housing Affordability Index (HAI) report published by the National Association of Realtors (NAR) rates each market in the U.S. compared to a baseline HAI of 100. 

In markets where housing is unaffordable, the index may be near 100 or even less than 100. On the flip side, the higher a HAI is above 100, the more affordable a market is to purchase a home. When compiling the affordability index scores, the NAR looks at the median price of a single-family resale home and compares that cost to the median family income in the market.

Based on the NAR’s latest report, the HAI for the San Antonio-New Braunfels MSA was 154.9 in 2018, the most recent year available. This means that the families in the market buying a home have a little more than 1.5X the median income needed to purchase a median priced, single-family resale home in the San Antonio metro area.

 

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Quality of Life

San Antonio is the place to be inspired, curious, hungry, and adventurous. The city is home to The Alamo, the San Antonio River Walk meanders through five miles of Downtown San Antonio, and SeaWorld and Six Flags Fiesta Texas are just a short car drive north of the city.

Key Quality of Life Stats:

  • Forbes ranks San Antonio 44th in the nation for job growth, the 48th best place for business and careers, and 55th for the cost of doing business.
  • Cost of living in San Antonio is just 2% above the national average.
  • WalletHub ranks the San Antonio metro area among the top 70 best cities in the country for jobs.
  • San Antonio receives a top grade from Niche.com with high scores for public schools, diversity, housing, family living, and nightlife.
  • The metro area is ranked by U.S. News & World Report as the 34th best place to live and the 39th best place to retire in the country.
  • CultureMap describes San Antonio as a place that “offers big-city amenities and world-renowned attractions coupled with a relaxed and inviting atmosphere.”
  • Climate in San Antonio is a mixture of humid subtropical and semi-arid, with very long hot humid summers and mild to cool winters.
  • Kayaking at Confluence Park, visiting the Farmers Market in The Pearl District, and wandering through the La Villita Historic Arts Village are just a few of the cool things to do in San Antonio.
  • Methodist Hospital-San Antonio and Baptist Medical Center are two of the best hospitals in San Antonio, Texas.
  • The NBA 5-time world champion San Antonio Spurs play out of the AT&T Center on the east side of the city.



Get Out the Map

Where to begin your search? Roofstock created a heat map of San Antonio based on our Neighborhood Rating, a dynamic algorithm that enables you to make informed investment decisions by measuring school district quality, home values, employment rates, income levels and other vital investment criteria.

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DARK GREEN: 4-5 star neighborhood
LIGHT GREEN: 3.5-4 star neighborhood
YELLOW: 2.5-3 star neighborhood
ORANGE: 2 star neighborhood
RED: 1 star neighborhood

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Jeff Rohde

Author

Jeff Rohde

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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