San Antonio Real Estate market insights

[Justin Brickman]

Mark Sprague 

Is inflation going to get worse?

It will be mixed depending on the industry. Wages and the supply chain are the top things to keep an eye on. If wages are increasing, that puts pressure on production and manufacturing values increasing, which in turn increases inflation. Expect between 3.5% to 7% inflation over the next couple of years.

Where will interest rates end up next year?

When we look at the point of view the Federal Reserve has taken, we don’t see interest rates above 3.5% to 3.75% by the end of 2022. However, we are tracking to see early signs of how the Fed tapering is received by investors and watching how inflation plays out to determine if we need to move our forecasts higher in the coming months.

When will we have enough housing production capability in our Texas metros to meet demand?

About 1.5 to 2+ years out, and even then we might be short. With labor as the main reason, part of this is a smaller labor pool, and the other is the challenge of COVID variants impacting workers’ lives.

What are some other affordability challenges?

One of the reasons that sales and rental values are continuing up is the lack of supply.

Nationally, regionally, and locally we must increase the housing supply.
There is a need to recruit and train workers for residential construction to do so. Not only teach these trades early in the educational process but start internships while they are in high school.
Improve zoning and land development approval processes to enable more lots in a quicker time frame.
Improve the building material supply chain, including a new softwood lumber agreement with Canada.
Reevaluate all tariffs on goods.