Stories by Gayle Spencer
“Real estate is like the weather – it’s all local,” reported Bob Leonard, 2008 chairman of the San
Antonio Board of Realtors (SABOR), in his January Annual Housing Forecast.
“Real estate is local,” echoes Travis Kessler, president and chief executive officer of SABOR, in a more
recent interview.
“Baby, all real estate is local,” repeats Becky Oliver, executive vice president of the Greater San Antonio
Builders Association, in case no one else managed to get that message across.
What makes these local
boosters so consistently
insistent about this?
National headlines. “The press really paints a negative market
– a gloom-and-doom outlook,” says Kessler.
“The 41-percent increase in foreclosures has resulted primarily
from investor-heavy purchases in Arizona, California, Florida and
Nevada,” says Leonard. Real estate speculation fueled wild price
increases and then crashes in those housing markets. “The majority
of these individuals are flippers,” he says.
“Articles the media takes off the AP (Associated Press) wire,” says
Oliver, “probably scare people away. There is absolutely no truth in
these articles as it relates to San Antonio.”
Approximately half of the country’s metropolitan areas recorded rising
home prices in the fourth quarter of 2007, according to the National
Association of Realtors. Lawrence Yun, the association’s chief
economist, says, “The healthiest housing markets today generally are
moderately priced and are experiencing job growth and often population
growth, which in turn is supporting strong price growth.”
This description seems applicable to San Antonio. Ray Perryman,
Ph.D., predicts continued job growth over the next five years.
According to The Perryman Economic Forecast: Short-term Outlook
for the US, Texas, and Major Metropolitan Statistical Areas, employment
in the San Antonio Metropolitan Statistical Area was
899,500 in 2007. By 2012, area employment is anticipated to
be 984,900.
Certainly, population is increasing. Figures from the office of the
state demographer’s South Texas Data Center, housed at the University
of Texas at San Antonio, indicate the number of people living
in the San Antonio area could exceed 2.2 million as early as 2015.
In a recent study conducted by Arthur “Chris” Nelson, Ph.D., for the
Texas Society of Architects, he observed that the state of Texas is
growing about 25 percent faster than the rest of the country and
that by the year 2040, the state will require 3.8 million more residential
units than were in existence in the year 2005.
With so many people moving into the area, Oliver feels the conclusion
is obvious: They need places to live. “We have to build,”
she says. “Texas led the nation in housing starts for the first time
ever in 2007. In San Antonio, 2007 is the third-best year in housing
starts, with 11,900. 2008 will be even with 2007, or about
11,500 at the lowest.”
 With more than 25,000 sales of existing single-family homes in
the San Antonio area, the year 2006 represented a banner year.
However, 2007 sales were on a par with 2005 sales, the city’s
second-best year, says Kessler.
And in San Antonio, job growth and population growth appear
to be producing a steady appreciation of home values. Kessler
points to First American Corporation’s Loan Performance Home
Price Index, a study released in December, as one indicator. During
the period from October 2006 to October 2007, home prices
in San Antonio rose almost 8 percent – placing fourth among
major metro areas throughout the country.
The National Association of Realtors’ statistics for the fourth quarter
of 2007 reflect the same strong increase in value for area sales
of existing single-family homes. Leonard identifies numerous neighborhoods
as examples of the upward trend of valuations in San Antonio.
The average per-square-foot value in existing home sales
between 2005 and 2007 rose 8 percent in Bluffview, 12 percent in
Braun Station, 14 percent in Deerfield, 16 percent in Alamo Heights
and 17 percent in Hunters Creek. In only one year, the 12-month
period between 2006 and 2007, the square-foot value rose 7 percent
in Olympia, 15 percent in The Dominion, 21 percent in Shavano
Park and 22 percent in Olmos Park.
Kessler says the purchase of a home should be viewed as “a
strong investment for equity return over time.” “In terms of
wealth-building, there’s not a better value” adds Oliver, “Any home
that you buy in San Antonio is going to continue to grow in value,” she predicts.
The house price calculator found on the Web site of the Office of
Federal Housing Enterprise Oversight, www.ofheo.gov, provides an
objective tool for evaluating home investment. The calculator indicates
that if someone had purchased a home in the San Antonio
area for $200,000 in the fourth quarter of 2000, that home would
have commanded approximately $279,200 in the fourth quarter of
2007 – a 40-percent increase in value over the past five years.
“San Antonio is one of the most affordable large-city markets in
the country,” says Kessler. The average price paid for homes in
the San Antonio area in 2007 was $183,000, approximately
$100,000 less than the overall average for the whole country.
Recent reductions in interest rates designed to stimulate home
sales in parts of the country where real estate plummeted make
investing in homes in San Antonio even more attractive. Thirty-year
fixed mortgage rates are now below 6 percent, which means that
for those who qualify, borrowing money is less expensive. “Anything
below 8 percent provides housing affordability,” explains Kessler.
“Owning a home is by far the biggest and best tax break for middle
America,” according to the National Association of Home
Builders. “In most instances, all of the mortgage interest and property
taxes you pay in a given year can be fully deducted from your
gross income to reduce your taxable income.”
Affordability is key, particularly for those just entering the housing
market. “Thirty-seven percent of our annual sales are to first-time
home buyers achieving the American dream of owning a home,” observes Kessler.
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