The San Antonio Real Estate Market: A Smart Investment in 2021?

San Antonio is one of the most stable markets for rental activity in the nation, with plenty of room left for upward growth. According to the San Antonio Business Journal, Generation Z is the most active renter generation in San Antonio. As home sales continue to surge in San Antonio, prices are rising and inventory is tightening making rental property in San Antonio an increasingly popular investment.

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 what investors should know about the San Antonio real estate market in 2021.

>>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. People from all over the country are moving to San Antonio, attracted by the area’s low tax rates and low cost of living. In fact, 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 over 2.5 million people living in the metropolitan area.
  • Population growth in San Antonio is 1.78% year-over-year.
  • 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 34.4 years, with 44% of the population between the ages of 20 and 49.

 

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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.

As the economy of San Antonio continues to recover, the BLS reports that construction, trade and transportation, financial activities, and information technology are some of the employment sectors in San Antonio showing the fastest signs of new growth.

Key Employment Stats:

  • GDP of San Antonio-New Braunfels MSA is nearly $129.4 billion, according to the Federal Reserve Bank of St. Louis, and has grown by nearly 64% since 2010.
  • Job growth in San Antonio last year was 1.95% while median household incomes increased by 1.07%.
  • Unemployment rate in San Antonio is currently 6.3% (as of Oct. 2020) and prior to the recession was 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.  
  • 85% of San Antonio residents have a high school degree or higher, while nearly 29% 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 listed 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 noted that San Antonio is often overlooked, even though single-family home prices here climbed 8.9% over the past year.

Twelve months later, it looks like Curbed’s prediction of the San Antonio real estate market outperforming was right on target. As the San Antonio Express-News reports, home sales and prices in San Antonio have skyrocketed while the supply of available homes for sale continues to tighten.

Key Market Stats:

  • Zillow Home Value Index (ZHVI) for San Antonio is $198,259 through November 2020.
  • Home values in San Antonio have increased 5.0% year-over-year and are predicted to grow by another 9.9% in 2021.
  • Over the past five years home values in San Antonio have increased by more than 31%.
  • Median sales price of a single-family home in San Antonio is $260,900 according to the most recent report from the San Antonio Board of Realtors (SABOR) as of November 2020.
  • Median price of a single-family home for sale in San Antonio has increased by 13% year-over-year.
  • Price per square foot of a single-family home listed for sale in San Antonio is $143.
  • Home sales transactions in San Antonio have increased by 27% year-over-year.
  • Days on market is 49, with homes in San Antonio selling 18% faster than the same time last year.
  • Of the 173 neighborhoods in San Antonio, Realtor.com reports that The Dominion is the most expensive neighborhood with a median listing price of $750,000.
  • Most affordable neighborhood in San Antonio to buy a home is Highland Hills where the median listing price is $147,000.



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Attractive Renters’ Market

San Antonio is one of the most stable markets for rental activity in the U.S., according to the San Antonio Business Journal. About 60% of the rental applications came from renters moving from somewhere else within the city. Generation Z overtook Generation X as the most active renter generation in San Antonio, in part due to the youthful population of San Antonio.

Strong performance of the rental market in San Antonio is one reason why WalletHub ranks San Antonio as one of the best cities for renters. The report analyzed more than 180 rental markets using the same key measures real estate investors use, including activity in the real estate market, cost of living, and growth in the job market.

Key Market Stats:

  • Median rent in San Antonio is $1,499 for a 3-bedroom home, according to the most recent research from Zumper (December 2020).
  • Rents in San Antonio have increased by 7% year-over-year.
  • Over the past three years average rents in San Antonio have grown by 11%.
  • Renter-occupied households in San Antonio make up 39% of the total occupied housing units in the metropolitan area, an indication that there is plenty of potential growth left in the San Antonio rental market.
  • Most affordable neighborhoods in San Antonio for renters include Quintana, Wheatley Heights, and Sunny Slope where rents are less than $900 per month.
  • Most expensive neighborhoods in San Antonio for renters are Avenida Guadalupe, King William, and Downtown San Antonio where rents go as high as $4,800 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 month Freddie Mac releases up-to-date data on the change in home prices for all markets across the U.S. The most recent Freddie Mac House Price Index (FMHPI) report for the San Antonio-New Braunfels, TX MSA shows:

  • October 2015 HPI: 176.89
  • October 2020 HPI: 237.79
  • 5-year change in home prices: 34.4%
  • One-year change in home prices: 7.9%
  • Monthly change in home prices: 0.6%

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 41st best place to live and the 24th 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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