San Antonio Apartment Market Report
- Apr 01, 2014
San Antonio is considered one of the more stable cities in the country, only slightly touched by the Great Recession. It is thought to be a great city to live and raise families in because of its low taxes, fair legal system, educated workforce and attractiveness to new businesses.
Marcus & Millichap reports on the city reflect an economy that is on the rise, in great part due to the employment boost given by oil-field service companies. The Eagle Ford Shale area is a great provider, even more so since Halliburton Co. opened its 150-acre, 400,000-square-feet operation center; they alone announced 1,000 job openings in 2013. The oil industry triggered a second round of employment in adjacent industries such as health, education and government. Among the major employers of the northern region there are the University of Texas at San Antonio, USAA and the Medical Center District; they are, in fact, part of the reason for the projected 65,000 new households between 2012 and 2017.
To keep up with the rising demand, the developers are bringing 4,700 units to the market this year, especially on the Broadway corridor and northwest and north central San Antonio; this represents a 2.9 percent expansion of stock from last year’s 4,000 units delivered. Simultaneously, rental inventory is expected to expand by nearly 3,500 units in the areas around the mentioned employers, representing a moderate rent growth.
The economic situation encourages investors to bring assets on the market, according to Marcus & Millichap; though tight, the available inventory will include listings of Class A and Class C, unlike last year’s limited and almost exclusive listings of Class B properties.
The single-family home segment has also increased—year-over-year sales are up 57 percent. Even though the permits acquired in the third quarter of 2013 represent a 45 percent jump from the previous year, the number is still 53 percent lower than the pre-recession peak of 2007. The median price of an already built single-family home has gone up 11 percent, reaching in the third quarter $177,000. As result, it has become more affordable to rent than to own, more precisely, the monthly payment for a median-priced home based on traditional financing costs $120 over the average rent for 2000s apartments in the metro areas, advancing 2.9 percent from the previous year to $842 per month.
The 2014 NAI ranking dropped two places, due to the drawdown of military personnel and above-average vacancy. Based on Marcus & Millichap’s National Apartment Report, vacancy will decrease by 10 basis points to 6.3 percent, after a 40 basis-point decline a year ago.