Stephanie Marquez / Rivard Report
As rising rents and low interest rates lure more San Antonio homebuyers into the market for the first time, they are discovering builders and banks are making it easier to afford a home – that is, if they can find one.
The buying power from relatively low interest rates along with a variety of loan products and down payment assistance programs is making the plunge into homeownership more attractive, said Kim Bragman, a 13-year realtor with Phyllis Browning Co. and chair-elect of the San Antonio Board of Realtors (SABOR).
There’s no lack of demand in San Antonio, she said. “What we’re seeing is a lack of inventory.”
Home prices are rising, both in San Antonio and across the nation. Data from the Texas A&M University Real Estate Center shows the average home sales price in the San Antonio metropolitan area rose 6.5 percent in June over the same month last year to $283,674 from $266,367.
According to NAR, the average price of homes purchased by first-time buyers is slightly less, at $219,300. Though SABOR does not track first-time homebuying data, its accounting of the number of smaller-sized homes sold in the low-$200,000 price range reveals some first-time home buying trends in San Antonio.
During the first half of 2019, 91 two-bedroom homes priced between $200,000 and $250,000 sold in San Antonio at an average price of $222,972, according to SABOR. The total number of two-bedroom homes sold in that time period was 794 (almost 5 percent of all homes sold) at an average price of $187,834.
“The inventory of properties that are below $200,000 is more limited than if you move up into next price range, $200,000 to $300,000,” Bragman said. “About 30 percent of homes sold in our area in June were under $200,000. In the next range, it was 62 percent of the month’s sales.
“That just indicates not a lot of inventory in that price range. When you get under $200,000, it’s very typical to see multiple offers on properties.”
The low inventory is due in part to home builders struggling to catch up since the recession, Bragman said, along with increasing land prices and government restrictions and the rising cost of labor and construction materials. For that reason, more new homes are being built today in the $300,000 to $500,000 price range, she said, than homes priced lower.
But builders also are offering special incentives to attract buyers, said Alex Perches, who often works with first-time buyers as a realtor with Texas Premier Realty. And several builders are offering starter homes as low as $140,000, he said, including Rausch Coleman, Lennar, and DR Horton Express Homes.
Those homes go fast, however. “When you go on-site to that property, they don’t have any of those homes to see because they are already sold, and they have waiting lists,” Perches said.
Terramark Urban Homes announced Thursday it is breaking ground on the East Side with home prices starting at $130,000. Buyers may be able to qualify for downpayment and closing cost grant programs, including a grant of 3 percent of the purchase price of their home (up to $10,000) to go toward their down payment and up to $7,500 for closing costs or to buy down the interest rate.
In June, the supply for all homes in San Antonio – new and existing – was at 3.9 months, up from 3.5 months the year before. (Months of supply is the measure of how many months it would take for the current inventory of homes on the market to sell.) For homes in the $100,000-$200,000 range, it’s only two months. In general, inventory rates rise with price.
But location, as the real estate saying goes, means a lot. Stefanie Arias closed on her first home in March after 20 years of renting. It took her only one day to find the home that met her requirements – a fenced two-bedroom on the West Side near Jefferson High School priced under $150,000. She was willing to work with a fixer-upper that didn’t have any structural issues.
“It was incredibly quick and easy,” Arias said. “I think it helped that I wanted to be in an area that is not considered as desirable as where a lot of people right now are looking to buy. Frankly, that’s also part of the appeal.”
Few of Perches’ clients come to him looking for a real fixer-upper these days, he said. “They want turn-key, move-in-ready homes.” And Bragman said there’s a lot of interest among first-time buyers in the neighborhoods near downtown.
And the ages of first-time buyers vary as widely as what and where they want to buy.
Nationwide, the age of first-time homebuyers is going up as young people cope with education debt and focus on starting their careers. NAR data shows the median age for a first-time buyer is 46, the oldest since the national organization began keeping records in 1981.
In Texas, the median age of first-time buyers last year was 32, according to Texas Realtors, with 61 percent of them married couples, 15 percent single women, 13 percent single men, and 7 percent unmarried couples.
Perches’ recent clients include a young man who works as an auto mechanic and plans to pay off his new house within a year, a 20-year-old newlywed moving from Alaska, and a 30-year veteran of the Air Force.
He advises those homebuyers – especially if they are looking for a home under $200,000 – to get pre-qualified for a mortgage before they start househunting, and be ready to make a competitive offer, even above asking price.
Perches also often directs his clients to programs such as Homes for Texas Heroes that help teachers, first responders, and others with down payment assistance and to lenders like Bank of America where they can learn more about downpayment grants.
He also tells them about the little-known mortgage credit certificate, which allows a first-time homeowner to claim a tax credit for some portion of the mortgage interest, and nonprofit mortgage programs such as the Neighborhood Assistance Corporation of America.
Local architect Jef Snyder, age 32, had no plans to buy his first home until he qualified for a Wells Fargo down payment grant of $15,000 in 2015. He had 60 days to get a house under contract.
Snyder found the house he wanted to buy, a 100-year-old Victorian farmhouse in Dignowity Hill. But it wasn’t for sale. “I approached the owner twice and he said no,” Snyder said. “On the third time, he said yes.”
“It was a great opportunity for me. I bought it at pretty low value, and it’s increased a lot in the last four years,” Snyder said. “I’ve built up a lot of equity in a short time, which has been huge. The process of fixing it up was welcomed. As an architect, that gets me excited, and I was eager for that process.”