Home Sales 2006: It was a very good year
Web Posted: 12/30/2006 01:28 PM CST
Jennifer Hiller
Express-News Business Writer San Antonio homes this year sold like tamales at the holidays: fast. By early December, more than 22,600 existing homes had changed hands, and quickly. Most of the houses went on and off the market in 60 days, compared with an average of 69 days in 2005, according to the San Antonio Board of Realtors. Homeowners also sold their homes for a sweet price: 97 percent to 98 percent of list price the entire year. One sign of the city's strong market was that 150 to 175 new real estate agents charged into the business each month. By late 2006, the Alamo City had 7,700 real estate agents.
But there were signs by the end of the year that San Antonio's real estate market might be returning to a more normal cycle. As of the last day of November, the number of homes on the market swelled to more than 9,000 and San Antonio had a six-month supply of existing homes — the key indicator of a market balanced between buyers and sellers. The rest of the year had seen inventories in the four- or five-month range. Industry experts consider anything below six months to be a seller's market, and anything above six months to be a buyer's market, meaning that San Antonio finds itself smack-dab in the middle. These were some of the biggest trends in existing-home sales for 2006:
Going west
It wasn't just new homes in Northwest San Antonio that sold like crazy this year. Sales of existing homes, too, jumped in 2006. Between January and November, nearly 3,000 pre-owned homes sold in the Northwest area sandwiched between Loops 410 and 1604, north of Culebra Road. That's 13 percent of all homes sold in the San Antonio area in the first 11 months of the year. Lance Elliott of the housing research firm SA Research said that although the area has been popular for years, the massive shift west has surprised even him. He noticed the shift has caused home values in the area to rise this year. "The home values in the west were never particularly high. Now there's a full range of home values," he said. Elliott expects San Antonio's westward expansion to continue for the next eight to 10 years, with buyers shopping both for new and existing homes. "Once momentum starts, it will carry an area for a number of years," Elliott said.
Stone Oak frenzy
How to explain the North Side real estate market in 2006? Pandemonium might do. Early in the year, an announcement by North East Independent School District to cap student enrollment at two popular campuses sent home buyers into a race to beat the district's deadline. The district has struggled to keep pace with student enrollment. This fall, home buyers needed a contract date of April 30 or earlier to enroll their children in Bush Middle School or Reagan High School, two of the North East district's most desirable campuses. After that, new students would be sent to other schools to ease crowding until the district can open more campuses in 2007. The decision to cap enrollment created a furor in the already-popular real estate market in the neighborhoods outside Loop 1604 and off Highway 281 and Stone Oak Parkway, which feed those schools. Sales of existing homes rose 25 percent in the first quarter. Nearly 1,100 buyers managed either to close on a house or sign a contract by the North East Independent School District's April 30 deadline, according to data from the San Antonio Board of Realtors multiple listing service. But even after that, home buyers continued pouring into the area. By November, sales volume was up more than 15 percent over 2005.
Older suburbs
Some of San Antonio's older suburbs saw resurging prices this year. Passed over for a few years in favor of new neighborhoods outside Loop 1604, buyers seemed to realize in 2006 that there were deals to be had in older neighborhoods that offered the large lots, landscaping and trees not found in newer developments. "If something looks like a good deal, the market moves in that direction," said Bob Gardner of Gardner Financial Services. Buyers sought out houses in the area north of Loop 410, but south of Loop 1604, and in between Interstate 10 and U.S. 281. Prices for resale homes in Bluffview went up 18 percent; Deerfield appreciated 12 percent; Elm Creek jumped 15 percent; Braun Station prices rose 11 percent; and Hunters Creek went up 17 percent, for example, Gardner said. "They were trailing the market," Gardner said. "Those are well-located, but older, subdivisions. They had not been increasing in value as much as other areas or as much as the 09 area. Because they were trailing, they became popular. You could go in, fix it up and feel like you still had gotten a good deal." Gardner said rising prices in the city's older subdivisions indicated a healthy local economy and a growing city. But they also indicate something else: Traffic is getting worse because of the growth, and subdivisions more centrally located look better and better to buyers.
Foreclosures
One side effect of a healthy housing market and easy lending requirements is a lot of foreclosures. The high number of San Antonio foreclosures in 2006 was reminiscent of the late 1980s when oil busted and the city's real estate market crashed. But this time around home prices were climbing in neighborhoods across San Antonio. The city enjoyed one of the healthiest real estate markets in its history while mortgage interest rates remained near historically low levels. So what happened? Lenders made riskier loans, including many that required no money down, said Jim Gaines, a research economist with Texas A&M University's Real Estate Center. That caused some families to get in over their heads. "The biggest problem with all of that is if you buy a house with no equity in it, you don't feel like you have a lot to lose," Gaines said. "It's easier to walk away from." In 1996, 3,894 Bexar County homes went into foreclosure. This year, 8,837 homes did. There is an upside to the looser lending requirements, Gaines said. People who might not have qualified to buy a home 15 or 20 years ago can now give it a shot. And most of them don't end up in foreclosure.
Investor invasion
As the housing market cooled in much of the country, investors swarmed into San Antonio in 2006. In its December 2005 issue, Fortune magazine declared San Antonio the nation's strongest housing market for 2006, predicting an 8.3 percent home-price appreciation in 2006. That article sent a flood of out-of-towners into San Antonio to buy rental homes. Some real estate agents said out-of-state investors — mostly from California, Arizona and Florida — accounted for half their clients. Investors typically looked for newer homes that didn't need much updating. Most in demand were three-bedroom houses in the $100,000 to $120,000 range to keep rental prices at or below $1,100 a month — affordable to a large pool of renters. But that wave of investors meant the rental market for single-family homes also got flooded. The average rent dropped $202 a month since 2005, from $1,301 to $1,099, according to the San Antonio Board of Realtors. By the end of October, renters had their pick of more than 2,000 homes. More than 10,650 homes went on the rental market in the first 10 months of the year — 22 percent more homes than last year. Still, investor interest in San Antonio didn't seem to be waning by year's end. Michael Eckerman of Residential Asset Management is one Phoenix-based investor who has his sights on San Antonio. Eckerman owns more than 400 rental homes in Phoenix and said he plans to purchase San Antonio rental property in early 2007. "The beauty of the San Antonio market is that with an economy that's in a growing mode, you can buy that property and rent it out and almost have the rent carry the mortgage payment," he said.
Land, ho!
Remember the days when you could buy land for a few hundred dollars an acre? Neither do we. The Texas land market, on the rise for several years, reached new peaks in 2006. A wave of retiring baby boomers and hunters setting wanting weekend getaways pushed demand for Texas land to an all-time high. Their appetite fueled double-digit appreciation in the state's farm and ranch market. The San Antonio region — Bexar, Atascosa, Comal, Guadalupe, Karnes and Wilson counties — enjoyed 32 percent appreciation in 2005 to become Texas' hottest rural land market, said research economist Charles Gilliland with the Real Estate Center at Texas A&M. The land rush represented a huge cultural shift for rural Texas. In a recent Texas A&M survey, more than 75 percent of rural land buyers cited hunting and fishing among their top motives and 52 percent cited other recreation. Just 13 percent were interested in agricultural production.
Sticker shock
In 2006, it seemed that a whole lot of people suddenly had a whole lot of money to spend on their homes. San Antonio's luxury real estate market was on the rise. High-end neighborhoods cropped up across the Hill Country, offering large lots in low-density neighborhoods. Existing homes in well-to-do neighborhoods such as Fair Oaks Ranch saw price appreciation of 20 percent. Since 2001, the number of sales for homes priced above $300,000 has jumped 115 percent, according to data from the Texas A&M Real Estate Center. So what can that kind of price get you in San Antonio? At $300,000 and higher, agents say, granite countertops, wood floors and gas cooktops are common, along with gated communities and wiring for sound systems. Move the price a bit higher and there are outdoor kitchens and better materials: stone patios, marble floors and the like. Above $1 million, elevators start getting common. Meanwhile, homes that cost $100,000 or less became increasingly scarce in San Antonio.
Ten years ago, more than 66 percent of the existing homes sold were priced under $100,000. By late 2006, that market share had plummeted to 26 percent.
jhiller@express-news.net
Online at: http://www.mysanantonio.com/business/realestate/stories/MYSA123106.1D.REexistingroundup.22da2e4.html
