San Antonio Express-News (Sunday)
Homebuyers grapple with limited inventory, rising prices
It’s a tough time to hunt for a house. San Antonio residents may want to take advantage of low mortgage rates, spread out in extra space or move somewhere new if they’re able to permanently work remotely.
But with fewer new listings hitting the market, they’re dealing with a shortage of available properties, particularly at lower prices. And the supply squeeze is unlikely to ease, at least in the near future, said Jim Gaines, chief economist at the Real Estate Center at Texas A&M University.
“Right now, people are staying put,” he said in an interview. “There’s not as much moving around.”
These factors are not just playing out locally, but in metros across Texas and nationwide.
And they are not new.
Supply has been tightening for a while, but the shortage has worsened during the coronavirus pandemic. Prices are also rising, making it more difficult for some residents to afford a home as prices outpace wage growth.
National inventory in September dropped to 1.47 million units and tightened to a 2.7-month supply, a record low, according to the National Association of Realtors. The median existing-home price was $311,800.
“There is no shortage of hope
ful, potential buyers, but inventory is historically low,” said NAR chief economist Lawrence Yun. “To their credit, we have seen some homebuilders move to ramp up supply, but a need for even more production still exists.”
Part of the increase in prices is due to a jump in sales of higherpriced properties, Gaines said. That tier of the market has been expanding faster than the lower end, he said, and the availability of homes under the mid$300,000s is particularly limited.
“That’s where the tightest market is in terms of both existing homes that are being offered for sale ... or new homes being built,” he said.
Activity slowed in the spring
amid lockdown orders, but purchases have surged since then. Sales were pushed back into the summer, disrupting seasonal trends, such as sales dropping off when school starts.
Prospective buyers who may have planned to buy a home next year are looking to take advantage of low mortgage rates. Opportunities to work remotely and interest in more space are contributing to the housing boom.
In Bexar and surrounding counties, sales year-to-date in September were up about 8 percent compared with the same period last year, according to the San Antonio Board of Realtors.
“We’re expecting the San Antonio market to stay strong,” Gaines said.
Active listings were down over 30 percent in September and inventory in the region shrank to 2.3 months. Six months is generally considered a good balance between buyers and sellers.
Prospective sellers may be holding off if they’ve lost their job, taken a pay cut or are concerned about the future. They may also be worried about exposure to the virus if strangers are touring their home, or opting to refinance and stay put.
“You don’t have the dominoes fall in the right order,” Gaines said.
But there’s some good news: Construction activity is picking up.
Homebuilders are “very conscious of the fact that the strongest end of the market is still under” the mid-$300,000s but are facing high land, materials and labor costs, Gaines said. That’s resulted in new homes and subdivisions being developed farther from cities’ downtowns.
“Builders are trying to hit that price bracket — (it’s) just tough,” he said.
Though the housing market is a bright spot, many people are still grappling with job losses and cut hours and have fallen behind on their mortgage payments.
Over 2.3 million homeowners are 90 or more days past due on their mortgage, but not in foreclosure, according to a September report by mortgage-data firm Black Knight.
The number of mortgages 90 or more days past due dropped by 43,000 in September, the first improvement in that figure since the beginning of COVID-19. Foreclosures “remain muted, given the widespread foreclosure moratoriums still in place,” Black Knight noted.
In a recent presentation, Gaines said he expects to see foreclosures above typical levels next year, probably in the latter half of 2021.
“There’s a lot of uncertainty,” he said. “If you’re in forbearance because you’ve lost your job, you’re going to have a problem making that up any time into the future.”
There’s a difference from the 2008 recession, when many homeowners were underwater on their mortgages, Gaines added. Owners who have built up equity can “sell it rather than go through foreclosure,” he said.