Writer: Jerrica DuBois
2 min read January 2023 — The real estate market has experienced a great deal of opportunity as well as turbulence over the last few years, with inflation, increasing interest rates and high prices remaining consistent challenges. However, the Alamo City’s real estate market looks to be in a better position than most coming into 2023.
Despite home sales falling for eight consecutive months and median home values on a steady decline, real estate in San Antonio-New Braunfels stacks up well against other U.S. markets. A new report from the National Association of Realtors named it among the top 10 to watch in 2023. The NAR selected its top 10 real estate markets for investment next year based on how they compared to the national average.
“People need to think about long-term wealth,” Erin Cestero, president of the San Antonio division of JBGoodwin REALTORS told Invest:. “The best way to build long-term wealth is still through homeownership. Ownership, even at higher interest rates, still means that you are paying yourself. Real estate remains the key to long-term wealth and savings. That is not going to change with an increase in interest rates.”
Indicators such as housing affordability, job growth and migration trends, among others, were taken into consideration by the NAR when producing the rankings. San Antonio landed at number nine on the NAR’s top ten metropolitan areas to watch. (Atlanta took the number one spot, and Dallas-Fort Worth came in at number three.)
Every city to make the top 10 is located in the Sun Belt, which has become widely popular for relocation in recent years. Southern cities should also perform well in 2023, and large coastal cities such as those in California are expected to see steep declines in home values and market activity.
In a broad scope, the housing market in San Antonio and nationwide has hit a slowdown as hopeful homebuyers juggle high mortgage rates and home prices, pricing many out of the option to own and back to the renters market. According to an analysis by the Texas Real Estate Research Center at Texas A&M University, that pattern will remain for the foreseeable future. Interest rates, along with changes in workers’ expectations and consumer behavior, will also cause disruption in the commercial real estate space.
In its efforts to suppress inflation, the Federal Reserve continues to raise interest rates. The Texas Real Estate Research Center expects fewer home sales in 2023 than in 2022 due to elevated prices and mortgage rates. According to real estate listings website Realtor, home sales in the San Antonio region will rise 2.5 percent and that prices will increase 4.6 percent year over year in 2023.
“You need to not only develop houses, but you also need to make them based on people’s wages,” Thad Rutherford, president and CEO of SouthStar Communities told Invest:. “Building more housing will bring prices down, but our industry needs to be creative about what types of housing are being built.”
The new year is also expected to provide a break for renters, as the rising rates of 2021 and 2022 may begin to cool. Home search website Apartment List noted a drop in median rent in San Antonio to $1,277 during the month of November. While the 0.9% decrease is a step in the right direction, the amount is still up 4.4% year over year.
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