Doses of market optimism, realism at SABJ real estate panel

Between the pandemic, remote work and wildly fluctuating interest rates, the housing market has experienced unprecedented peaks and valleys over the last four years. That was they key takeaway at the San Antonio Business Journal’s June 2 “Selling San Antonio” event, which sought to help parse the market for stakeholder groups. The Business Journal brought in housing experts to take the stage at the Veranda and share their thoughts and observations.

Cautious optimism for new homebuilding

Bryan Glasshagel, senior vice president of advisory with housing intelligence firm Zonda, delivered a keynote address on the state of new homebuilding and an economic overview of San Antonio. Strong job growth and in-migration, the bedrock of San Antonio’s economy, would likely continue putting downward pressure on the housing market, Glasshagel said. He cautioned that employment is a lagging indicator, however, and that unemployment rates would help determine whether the economy was headed for a hard or soft landing.

On the homebuilding front, Glasshagel noted that starts are down across the board in Texas, which is in line with national trends. He underscored that sentiment, however, by noting that together, the San Antonio and Austin markets still comprise the second-largest homebuilding market in the country. The good news is that closings are going up, which indicates that builders are working through a backlog of inventory that built up during the slowdown, so starts activity should likely see an uptick sometime soon.

Overcoming interest rate inertia in the homebuying market

After Glasshagel’s presentation, San Antonio Business Journal Editor-in-Chief Ed Arnold moderated a panel of housing market experts including Donna Terrell, senior loan officer with Legacy Mutual Mortgage, San Antonio Board of Realtors Chair Sara Briseño Gerrish and Thad Rutherford, president and CEO of master-planned developer SouthStar communities.

“We’ve got a really remarkable summer coming up,” Arnold said. “We’ve got high demand, low inventory and high interest rates.”

Those factors, Gerrish said, are giving potential buyers breathing room before pulling the trigger on a home. In the current environment, real estate agents are discussing assumable mortgages, “which we haven’t done in a hot minute,” she said, in order to motivate sellers who might not want to shed their current low mortgage rate for only moderate increases in quality of life.

Terrell played off that sentiment to more broadly question why potential sellers would choose to stay in a home they didn’t like to cling to a low mortgage rate. “That’s not good math for me. Take advantage of your investment, parlay your money and keep moving forward,” she said, noting that current interest rates are historically favorable.

“We’re going to have to work smarter and harder to get to those buyers,” Rutherford added. “And to say, ‘Now is the time to buy.'”

The first homes are being built at SouthStar’s Mayfair development in New Braunfels, one of the area’s hottest housing markets, and Rutherford and company hope to build 6,000 homes by the end of a 15-year development cycle. Despite interest rate hikes, he said developers, agents and lenders needed to work together to get buyers back into the market.

“Take it from someone who buys land and works it over 20 years: There’s no time but now,” he said.

Article originally published by San Antonio Business Journal.