San Antonio Real Estate Market Report for October 2023

[Bill Lockhart]

Happy Holidays to all my friends and neighbors! I am once again thrilled to discuss the San Antonio real estate market with you. While the situation may not have seen significant improvement, there's a limit to how long you can dwell on the negative before choosing to pick yourself back up and carry on. I firmly believe I have valuable information and opinions to share, and I hope you find them both insightful and useful. I am sorry this newsletter is late there was a problem getting some of the data I put into the newsletter.
Over the last 3 months, Rocket Mortgage has reported that the San Antonio real estate market shifted from a seller's market in August to a balanced market in September, and finally to a buyer's market in October. While I believe their predictions are a bit delayed, I do agree that we are currently in a buyer's market. Rocket Mortgage also notes a slight increase in prices in October, reaching $294,824. However, this contrasts with Redfin's data, which suggests a price decrease from $275,000 in September to $270,000 in October. I lean towards Redfin's data being more accurate.
Examining Rocket Mortgage's internal metrics, there's a 5% increase in active listings from September to October, indicating more housing inventory. However, the number of homes sold dropped by about 20% month-over-month. Notably, the percentage of houses selling below asking price hit a new high at 60% in October, up from 52% in July. Additionally, there's an increase in days on the market, rising to 61 days in October from 57 days in September.
In our late November update, we observe a slight increase in inventory, from 1.95 months at the end of October to 2 months in November. It's important to remember that the late October data showed a slight drop in market inventory, but this decrease was not reflected in the October numbers that showed a persistently weak housing market..
I am breaking tradition here and telling you about my real estate business before providing a summary of the market as a whole. Through a series of unfortunate events, I have five houses listed on the MLS for sale, plus a duplex for which I haven't figured out the selling strategy yet. Remember, I just finished telling you that I predicted the winter market would be weak, and yet, I have five houses on the market to sell. If I had written this letter two weeks ago, I would have told you how worried I was. However, I know it's better to be lucky than good, so here is today's update. I have one of the houses under contract. I have a second house that should go under contract in the next two days. I have a third house with an offer, and I am hoping we can come to an agreement. This is all in the last week. So I am feeling a lot better about my business.
Here's my take on the San Antonio real estate market: If you haven't been paying attention, 30-year mortgage rates have seen a continuous decline for the fourth week in a row; dropping by approximately 0.5% during this period. Despite the recent surge in inventory over the past few months, housing stock still remains at traditionally low levels. I predict this will led to a slight uptick in housing sales, driven by the modest decrease in interest rates.
As for future interest rate trends, opinions vary. Some anticipate an interest rate increase, even with the Fed no longer raising rates, speculating that the government will issue more bonds to finance our national debt. Conversely, others predict a decrease in the premium between the 10-year bond and 30-year mortgage rates, given the Federal Reserve's halt in interest rate hikes. Personally, I expect rates to hover around these levels for the next several months. This slight rate decrease has been personally beneficial. I also believe that a significant drop in mortgage rates could trigger another housing market frenzy in the spring. It’s important to note that these are my personal opinions. Overall, I maintain the belief that the San Antonio housing market is stable. While we may see modest price decreases this winter, I don't see any indicators pointing towards a significant housing collapse in San Antonio in the foreseeable future.
Quick update on how my wife’s land business is doing. She is supposed to sell her 3rd property this year next week. Yahoo! So she is actively looking at buying some more land here in the coming months.
Shifting our focus to the San Antonio multi-family market, let's tackle the basics first. Currently, the multi-family real estate market appears sluggish, with few new deals closing from my observations. While asking prices are experiencing a decline, buyers are seemingly in search of even lower prices. This trend is influenced by the ongoing high interest rates, stricter lending standards from financial institutions, and near-zero rent growth.
In my ongoing pursuit of knowledge, I engage in conversations with various individuals in the real estate sphere. One of my close friends, also a multi-family investor involved in six deals as a general partner, is facing challenges. One of their deals is encountering issues to the extent that there's concern about potential investor capital loss. For instance, they're grappling with a situation where the property management company failed, and a specific leasing agent was reportedly approving all rental applications for cash under the table. Consequently, the property swiftly declined, currently sitting at 30% occupancy and facing foreclosure.
This prompted me to reflect on my own investments. At the Annex, where I serve as a general partner, we recently transitioned to a new property management company a couple of months ago. I haven’t been to the property in almost a year, so I decided to do a little secret shopping and go down and pretend to be a potential tenant.
Wow! I was so happy after my trip there. First, driving around the property. The property looks great. No trash anywhere. The property looks like it is great condition. When I went into the management office, it looks great. The lady I met with was fantastic, knew her stuff, was very personable and seemed very competent. Overall, it was a great experience and I feel very confident in the property. Confident meaning I don’t think we are going to lose money and I expect to sell for a profit in the future.
In my earlier newsletters, I predicted a 10 to 15% dip in multi-family prices. I'm now adjusting that projection to a more significant 15% to 20% decline. While not all transactions will follow suit, some will experience up to a 40% reduction from pandemic highs, potentially resulting in a median decrease of 20%.
To sum it up, I expect there to be deals in the San Antonio multi-family space in the next year or two. However, I think those deals will be in properties that have been neglected and mismanaged and you will need to be an excellent operator to take advantage of those deals. I personally don’t see myself buying any large multi-family because I am not sure I know how to manage the management company correctly.
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In the San Antonio single-family housing market, I anticipate a minor decline in home prices during the winter months, a typical seasonal pattern. Despite this, our property acquisitions will persist, with slight adjustments to our offers to align with the slower market dynamics. Based on the data I've been monitoring, I remain confident that San Antonio won't face a significant collapse in single-family home prices in the foreseeable future.

Duplex $95,000. 910 Burton 78221
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