Writer: Jerrica DuBois
2 min read November 2023 — San Antonio just made history in the real estate world. For the first time in history, the region landed a coveted spot on the 2024 “Emerging Trends in Real Estate” report from PricewaterhouseCoopers and the Urban Land Institute. The Alamo City ranked eighth, cited as a ‘Super Sun Belt’ market for being large and diverse but still affordable. San Antonio edged out Raleigh-Durham and Seattle, who rounded out the top ten at ninth and tenth, respectively.
To help explain the San Antonio real estate industry’s continued growth and development, Invest: sat down with Ken Glass, division president of San Antonio for Chesmar Homes, and Marisa Jackson, agent success manager, Realty San Antonio-Compass. They shared their views on the emerging neighborhoods for investment, the impact of the economy on the luxury property market, and the continued growth of the Alamo City.
Are there any new or emerging neighborhoods or areas in Greater San Antonio that you see as particularly promising for real estate investment?
Ken Glass: The west side has undoubtedly been the fastest-growing area over the past couple of decades, and this momentum is expected to continue. New Braunfels is experiencing substantial growth, along with neighboring cities like Kyle and San Marcos, particularly along the I-35 Corridor. I would consider the far north region, particularly along the 281 Corridor, heading toward the Bulverde area, as another hotspot for growth. It’s worth noting that this area aligns well with the buyer profile and product offerings of Chesmar Homes, which tends to cater to move-up and luxury homebuyers. The south side of San Antonio is also witnessing rapid growth, primarily due to the availability of more affordable housing options. Notably, areas in the Hill Country and along the I-35 Corridor, such as Kyle, Boerne, New Braunfels, Bulverde and Fair Oaks Ranch, have experienced the most rapid growth.
Marisa Jackson: I definitely would say the southside of San Antonio. We took our agents to visit Brooks, which is on the south side of San Antonio. There’s so much opportunity over there with the growth and the land that they have. The city and the developers have done a great job of putting jobs over there and restaurants and other amenities. They are doing a great job of developing that area and we’re seeing homebuilders developing that area.
How does the economic climate affect the demand for investment in luxury property?
Glass: Firstly, demand in the housing market has rebounded remarkably and is now at levels reminiscent of the pre-pandemic era. Additionally, one notable shift we’ve observed is that more customers are contemplating purchasing their homes outright with cash rather than opting for financing. This trend is largely influenced by the fact that interest rates are currently at a 20-year high. In the past, it was financially feasible to borrow significant amounts at exceptionally low rates, often in the range of 2.5% to 3%. However, the current scenario has seen rates climb to around 7% to 7.5%, making financing less attractive. Given this environment, if individuals have the means to purchase a home with cash, it’s becoming a more appealing option.
Jackson: We have seen a slight decline in the number of homes going on the market and we’re seeing an increase in days on the market for homes in the luxury price point. Demand has gone down only slightly though because even in the luxury space, what you can buy here in the San Antonio market and what you can buy in another market would be two to three times higher. So we have seen a slight decrease but not anything substantial.
What opportunities does San Antonio specifically, and Texas more broadly, offer to make it an attractive place for investors and businesses?
Glass: Texas stands out on a macro level for several reasons. Firstly, it holds the distinction of being the number one growth state, as evidenced by U-Haul’s one-way move data. This trend has been consistent, with Texas leading the way in net domestic migration over the years. To put it in perspective, Texas took the top spot in 2016, 2017, 2018 and, more recently, in 2021 and 2022. This means people are flocking to the state, which translates to a wealth of growth opportunities and investment prospects. In terms of the real estate market, Texas shines as the national leader in home building, boasting an impressive number of annual starts. Notably, four Texas markets, including San Antonio, have secured spots in the Top 10 nationally. San Antonio, in particular, holds a strong seventh position in the country’s home-building landscape.
How is the growth of San Antonio affecting the real estate market?
Jackson: There is a need for housing. We do have lots of people moving here because we are relatively affordable compared to other markets of our size — the median household sales price is still pretty affordable. It’s just a nice place to live in and work. However, we’re not building houses as quickly as we need to so, technically, we still have a shortage in home inventory right now. Rents are also going up as interest rates hindered some people’s ability to get into housing.
I think San Antonio and Austin are going to grow into a metroplex. We’re going to be similar to Dallas-Fort Worth in that respect, where the 35 corridors are going to grow. We’re already seeing tons of growth out in what used to be the suburbs, like Boerne, Seguin, Castroville and Kerrville, which used to be hill country. We’re seeing a lot of growth and development. Towns are going to be growing a little bit more. I think it’s sustainable but people are going to have to move further out and maybe travel a little bit more.
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