Home prices in San Antonio- the outlook (mortgage, credit)

[Drzy]

Originally Posted by googie2525

100% correct! I think I posted this AH, TH, and OP statement about two years ago to a lot of jeers as I recall...and ShaneSA, hold onto those Mahnke Park homes you own, they'll be as good as gold in a few years (of course, you already know that ).

Forgive my ignorance, but I never understood how this worked. It seems like if a property's value has increased at a faster rate in the past, it would have a harder time doing so in the future. Sort of like how if college education costs continued to outpace salary & wealth, it would eventually reach a point such that nobody could afford it (so it couldn't possibly keep up).

Would one property's value consistently increasing at a higher rate work the same way? I'm definitely not saying you guys are wrong, I'm just having trouble grasping how it would work in the long term.

[Cookiemeister]

Originally Posted by ShaneSA

I'm holding onto those Mahncke Park properties for my old age. Does anyone know when that happens? I'm so tempted some days to throw them all on the market. Especially when a property next to one of mine just sold for a ridiculous amount of money. (I know what they paid for it!!!!!) I also know what they put into it. So with that, I don't think the values in San Antonio really went down. I don't see the market slump.
I also see a significant increase in the rental market. Rents have increased tremendously, and anytime I have a vacancy, it's almost a stampede from potential tenants to get it. Maybe I should raise rents.
Rambleing over.

Old age begins at 50! Do you think that Monticello Park will go up or down in 5, 10, 15 years or do you think I should jump ship?

[Steel Man]

Originally Posted by Cookiemeister

Old age begins at 50! Do you think that Monticello Park will go up or down in 5, 10, 15 years or do you think I should jump ship?

I hope you're talking about "house" age.

Anyway, I would like to see house price appreciation slow down a little here (say 5% or less a year).

[Chaka]

Well, ours almost doubled in the 3.5 years we've owned it - at least according to property tax valuations. We put about 50% into it, but honestly the main value is in the property itself. Market value is apparently somewhat higher...

Not bad for the ghetto.
Well, it only matters if we sell.

[allbizness]

Originally Posted by banker

A big tell tale sign is the dramatic slow down in new home construction outside 1604.

That has to do with over supply. Ironically, said over supply is being sold off pretty quickly.

[hello13685]

Drzy, you're not ignorant at all. You're actually thinking. The ARTIFICIALLY low lending rates of the past several years caused the, yup, you got it, ARTIFICIAL appreciation that must disappear as people will gradually be forced to purchase based on price and income in lieu of creative financing. People will say that SA didn't experience "the bubble," but then in the same breath say that their values doubled in a few years. I would suspect that things will not deflate completely. A normal amount of appreciation (3% annual) may be factored in, and inflation may take care of a lot of this too, stabilizing prices a bit. But the key is that people are going to have to PAY FOR these pie in the sky increases, and no one really considered this before, of course.

[Paka]

Our rental property was purchased on 8-7-03. It is in the 78240 zip code.

It has appreciated, as of today, 58.7% in the 5 yrs, 1 month since we bought it. That means that not only have we enjoyed the income it generates, but it has shown almost 12% return on our money for the base five years.

While NOONE can promise you guaranteed returns on any investment, we KNOW that we made a great choice in purchasing real estate, and you would have a hard time putting your money somewhere that would pay you monthly AND give you this type of return if you are considering buying investment property in SA.

That said, there will always be those that are afraid to commit to anything, and those that live beyond their means and get in over their heads...but you need to do what is right for you.

[dvlpr]

Originally Posted by Drzy

Forgive my ignorance, but I never understood how this worked. It seems like if a property's value has increased at a faster rate in the past, it would have a harder time doing so in the future. Sort of like how if college education costs continued to outpace salary & wealth, it would eventually reach a point such that nobody could afford it (so it couldn't possibly keep up).

Would one property's value consistently increasing at a higher rate work the same way? I'm definitely not saying you guys are wrong, I'm just having trouble grasping how it would work in the long term.

Drzy -

There's two things that makes these neighborhoods (and others like them) more valuable than their suburban counterparts:

1. Barriers-to-entry. As opposed to hisoric neighborhoods, suburban neighborhoods are easily replicated, as adjoining rural properties can be much more easily subdivided. Why is it easier? Very cheap land (comparatively), little regulation, and abundant utilities and infrastructure. The suburbs work because they're much, much cheaper (new homes in the burbs cost as little as $70/sf). Of course, the reason they're so cheap is because as little capital as possible has been invested in making these subdivisions valuable over the long-term.

2. Neighborhood quality. Suburban neighborhoods feature buildings with mass-produced "architecture", and these buildings are arranged in ways where different uses are completely seperated from one another (housing, retail, office, etc.). Poorer overall architecture quality and this seperation of uses suffer greatly in comparison to historic neighborhoods, and the market puts a greater value on these places.

(Quick note - I'm not trying to pick a fight with my suburban brothers and sisters - I understand the many of you prefer the things the burbs offer - but the objective truth is that prices are higher in historic, urban neighborhoods, and this proves the market's preferences)

So, when you have a finite supply of product because of barriers-to-entry (supply) and a neighborhood quality that is proven to be more valuable (demand), well................economics tells us that not only is there a greater liklihood that these neighborhoods retain their value, there's a greater liklihood that their appreciation will outpace their suburban counterparts.

[Drzy]

Those two points are true (although the 2nd is rather subjective, as you pointed it out), and certainly do make them more valuable. But aren't they already factored into the price of the homes? I think future appreciation would only be affected if the future increase in these factors outpaced their current expected rates.

[hello13685]

I agree that 2000-2007 was a great time to be an investor in San Antonio. I would just caution people to apply that experience to the NEXT seven years! Drzy, I'm sorry that no one else has addressed your fundamental economic question concerning people's ability to pay.