Greetings friends, old and new! It’s time for my take on the San Antonio real estate market for January 2023.
If you know someone who’d like to stay updated with our newsletter, please direct them to email us at bill@jbblcapital.com.
Firstly, I’m glad to see the end of the winter months. The San Antonio real estate market should soon witness a surge in activity. According to Rocket Mortgage, the market officially transitioned from a seller’s market to a buyer’s market in January.
The number of homes for sale increased by 7% in January compared to December. Properties now spend an average of 66 days on the market, up from 59 days in December. The San Antonio real estate market was undoubtedly going through its winter blues.
On the positive side, a widely cited report from the National Association of Realtors predicts that the San Antonio and New Braunfels real estate market will show gradual price increases of approximately 2.5% in 2023. This should provide both buyers and sellers with a more balanced real estate market.
In our world, we recently listed a property on the market around the 10th of February. Our property at 734 Cypresstree Dr we received a staggering 60 showings, with numerous calls and four or five offers. Some of the offers were 10 to 15% below the asking price, and we declined them. We ultimately went under contract for about 4% less than our asking price, including $8,000 in concessions. Overall, I’m extremely pleased with the outcome of this sale. The property’s four bedrooms, .4-acre lot in a cul-da-sac, and a price point well below the median home price in San Antonio were some of its desirable features.
While I believe that this home may be an exception rather than the norm for San Antonio, it does give me hope that the single-family real estate market in San Antonio is healthy. Houses priced well will sell in a reasonable amount of time.
The story on the multi-family side is quite different. Here’s why: the house I recently sold would have sold for about 10% more last summer. Although that would have been nice, I’ve owned the house for five years, and it’s already doubled in price. As a result, I don’t require that additional 10%, and I have no investors who I promised returns to. Moreover, I have a fixed-rate mortgage on the home, which is different from multi-family properties. Multi-family operators who bought properties two or three years ago at super-low, variable interest rates are struggling to refinance their loans and make money at the higher rates. On a personal level, I’ve only been investing in multi-family properties for a year, and we’re doing well. We’ve purchased great properties, and we’re not encountering the same problems because we’re still within the rate-capped period of our loans.
Despite some fringe activity, the multi-family segment remains relatively quiet. However, we are starting to hear about forced selling by groups who have struggled to execute their business plans or have simply been unlucky. In such a market, having a well-run operation is absolutely essential. Fortunately, I am a part of two deals that are managed by a phenomenal team, many of whom I know personally. An example of this is on the deal that I am a general partner, the management team has been able to increase additional income from $0 to around $10,000 a month in just 4 months. This achievement has been a tremendous boon for the project, given the rise in interest rates from our initial rate up to our rate cap.
I anticipate that the multi-family market will become more active in the upcoming year as more multi-family loans come due, compelling owners to accept higher Cap Rates and sell at a discount. Although it might sound like wishful thinking, the numbers on multi-family properties look vastly different at 4% interest rates than they do at 7%.
My final thoughts echo what I stated last month: the US and San Antonio, in particular, are still grappling with a housing shortage in both multi-family and single-family sectors. We predict that the economic uncertainty will exacerbate this issue as builders in both sectors start fewer projects in these turbulent times. For this reason, investing in real estate is an excellent idea for the foreseeable future.
If you know someone who might be interested in investing in real estate with us on either the single-family or multi-family side, please reach out to us at 210 960 6543 or email bill@jbblcapital.com.