“Economy woes don’t deter homebuyers” was a headline in last week’s San Antonio Express News. The article states that Americans snapped up more homes in September, suggesting that the U.S. housing sector remains insulated from global economic turmoil. The National Association of Realtors said Thursday that sales of existing homes jumped 4.7 percent last month, the second-highest level since February 2007, according to Bloomberg. Buying activity rebounded after slipping in August, indicating that demand for housing continues despite a series of recent economic hits: stock market declines, falling factory orders, a slowdown in China, struggles from emerging nations such as Brazil and Turkey, and stagnation in Europe. The Real Estate market appears to have reached a stable plateau in recent months, aided by mortgage rates near historic lows and steady job gains that have reduced the unemployment rate to a healthy 5.1 percent. Yet, first-time home buyers remain scarce and relatively few properties are being listed for sale, capping the potential growth for the sector. “The report adds to evidence that home sales, and housing activity generally are trending up,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics. “The strength in housing has been off-setting weakness in manufacturing.” But any further acceleration in sales will depend on more properties up for sale.
Locally, an article in The S.A. Business Journal pointed out that San Antonio’s economy has been humming along for the past couple of years. A sure sign of the Alamo City’s health is its housing market—which has seen dramatic increases in sales activity and pricing. What tends to get lost in the good news, however, is the fact that a significant portion of our market is in decline—the “affordable housing market.” Now, a mere 2 percent of the market fits this threshold of homes priced under $150,000. Meanwhile, homes one bracket up—priced under $200,000—are on what Jack Inselmann, who heads up the San Antonio office of housing research firm Metrostudy, calls “the endangered species list.” Today, new homes at this price account for 31 percent of the market—down from 80 percent just 12 years ago. “All of this is a function of supply, not demand,.” Inslemann said.
My friends in the Texas Hill Country would probably agree that if they had homes priced in the $150-$200k range, they would sell quickly as well. Supply and demand is what is affecting that market in my opinion.
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