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Every year this event offers amazing information on what to expect. Speakers include both local experts, but also independent economist, Mark Dotzour of the Texas A&M Real Estate Center. All the real estate info comes from him. Sometimes it's good. Sometimes it's bad.
Overall, very encouraging news today. Here are some of the things I learned.
If you have a problem with any of these statistics, they're all from independent 3rd parties. Deal with them. Not me. Those that know me on this board know I don't care what you think. Just passing on what I got from a very informational meeting.
SAWS
-SAWS has a half year supply of water for the entire city stored for emergency. Very cool. I didn't know that.
-SAWS has a long term water plan in place (50 years) that was most recently updated in 2012. It includes plans on tapping the Carrizo aquifer, new pipelines, the Brackish desalinization project and they're also evaluating more proposals as we speak to continue to be able to provide water for the city.
-SAWS is currently working on a massive upgrade of our waste water system. Pipes are very old and damaged, with a TON of the damage coming from folks pouring grease down the drains (stop doing that people!!). They're currently asking for an 11% rate increase to fund it. However, we'll still have one of the lowest rates in Texas, by a long shot.
Eagle Ford Shale: Experts are predicting this to be a 20+ year play. They've currently got a little over 2000 wells drilled, but plans are for over 20,000. Great for jobs, as they HAVE to be local jobs. Also great for our income and housing in SA. However, there is still great concern that the EPA will step in and slow/stop things.
Rental Market: Rentals are at a roughly 97% occupancy. Average rent price is $1333/mo. Up from $1274 last year. Average days on market is 27. They move FAST! If you're looking to rent, don't drag your feet if you find a good one. If you've got money to invest, may not be a bad time to pick up rentals.
Mortgage lending: Nationwide mortgage lending is still horribly inefficient. There are Federal Regulations in place that are stifling it and preventing folks that SHOULD be able to get good loans from being able to. Dodd Frank is responsible for this. Fannie and Freddie have been bankrupt and insolvent since 2006 and guess what...they still are.
Fannie and Freddie are being kept alive by Congress, and it seems to be solely to fund pet projects. Congress needs some money for something, they can raise the rates and get it. Otherwise they should have been put to bed long ago.
Dodd Frank has regulations in it that makes it VERY easy for lenders to get sued up to 5 years down the road. They're seeing things like folks losing their jobs or getting divorced, and then suing when they get foreclosed on because the lender should have seen this as a possibility and not lent them the money. It's pretty ridiculous. Glad I'm not in that industry.
Real Estate/Economic:
-Market actually turned the corner in February. Local home prices began to steadily rise slightly and inventory started to go down. Builder stocks nationwide went up significantly and have held.
-Corporate profits are near record highs, however, most still aren't hiring because of the government. The healthcare laws are going to create turmoil and drastically eat into profits. Until they know what the outcome is of all the new laws and taxes, corporate hiring will still be very slow. They need time to figure out how they can hire, yet not handcuff their company with massive expenses.
-Small business is STARTING to hire again, due to years of pent up demand. However, they won't be hiring as many as they would traditionally, mainly due to the healthcare regulations and forcing them to pay certain amounts if they go over certain thresholds in amount of employees. Small business makes up 2/3rds of the jobs in this country.
-Home prices in San Antonio are beginning to rise, and in a lot of areas they're rising faster than the rates (ie. mortgage rate of 3.5% and home goes up 4-5%). That's positive leverage people. If that holds, that's the definition of buy low/sell high.
-National surveys (Texas A&M REC) shows that nationally the number of people "planning to buy in 2013" is up dramatically.
-San Antonio job creation is growing steadily. Mainly in the oil/gas, professional and hospitality industries.
-Phoenix is experiencing 30% appreciation
-Building is up, but not to the extent it was. Demand should stay up because one of the most difficult loans to get is for construction and land development. Seems to be done intentionally to keep demand up.
-Congress still won't cut spending, which will slow growth. However, growth will continue in the area in spite of congress. Lots of credit is due Bernanke on this.
Kevin & Nelson Wolff, local SA infrastructure/politics:
-They're currently in negotiations to bring two large employers to San Antonio, though can't say who or at what stage they're at. However, they feel confident in at least one and very possibly both. If so, both will be much larger than the Toyota plant. Cross your fingers.
-4 new freeway lanes have been approved on 281 between 1604 and Stone Oak Pkwy. Construction date uncertain. Funding already approved.
-Bandera Road also has expansion approved. Not sure of date.
-Making significant efforts to revitalize area south of Downtown. Includes new apartments/condos (some already almost full), performing arts center, live music venue, Riverwalk expansion (much already complete). Tons of money being spent in this area. Research the LoneStar Development Program.
-Experiencing the first decent growth since 2008, due to building. Not tax hikes.
General SA Real Estate info:
-All price points beginning to rise slowly
-Lowest inventory in years (5.6 months)
-Lowest number of active listings in 5 years
-Days on Market is at a 4 year low
-Median price has steadily increased since 2009
-Luxury home price per foot is up city wide
-Trulia, CNN Money and Kiplingers have all named SA as one of the top projected markets in 2013
-SA has a lower foreclosure rate than Texas
-Texas has 8 of the top 15 fastest growing cities, including SA.
Honestly, I still don't understand what they mean by "20 year play". Does that mean within 20 years the jobs start to go away? I only ask because I've heard that some of the smaller communities are hesitant to spend money on new schools, infrastructure, etc. because they fear that the jobs won't last.
Honestly, I still don't understand what they mean by "20 year play". Does that mean within 20 years the jobs start to go away? I only ask because I've heard that some of the smaller communities are hesitant to spend money on new schools, infrastructure, etc. because they fear that the jobs won't last.
Argghh. I want to know NOW what Kevin knows.
Thanks Kevin!
I'm am noticing that some of the rv parks are seeing an increase in " workers".
Honestly, I still don't understand what they mean by "20 year play". Does that mean within 20 years the jobs start to go away? I only ask because I've heard that some of the smaller communities are hesitant to spend money on new schools, infrastructure, etc. because they fear that the jobs won't last.
Argghh. I want to know NOW what Kevin knows.
Anytime there's a new oil field, they refer to it as a play. Lots of wells are 2-5 year plays. They drill, set up the rig, and in that time they pull out the oil and move on. Cap the well and you never know they were there.
Right now (as long as the EPA keeps their nose out of it) they're projecting to be fracking in Eagle Ford for 20-30 years, which is a HUGE amount of time. One of the biggest plays ever. And in that span of time, technology may advance to extend that. No way to tell.
One thing that the small towns are VERY cautious of is overbuilding, just like you said. They don't want to spend tons of money building infrastructure that won't be needed in 20-30 years, because once the play is over, they can be left with a huge tax liability and a ghost town.
They're actually bringing in a lot of consultants from larger cities to help them grow responsibly and set themselves up for the future.
Because SA is so close, these towns will not have to expand as much because WE can absorb the workers and families. WE have the infrastructure they need for a lot of it.
What you'll also probably see happen is more industry popping up in those towns, so while they probably won't become large cities, more and more people means more and more business, so they'll grow in other industries and hopefully become more self sufficient.
The other half and I were at Herman Sons in Hondo a few months ago and SAWS was there giving a program to ranchers about contracting water rights to SAWS. My cuzin at Sabinal is working with SAWS now for water rights. I think of any of the SA agencies, SAWS has it going on for the city's future. I'd agree with the assessment about housing in the small towns in deep South Texas. A friend works for Palm Harbor Homes and they are running all out with mobile homes going into the Eagle project. It's been an EXTREMELY profitable thing for him- kinda like hitting the lottery, really.
I just read an article about the SA New Residential Construction that contradicts what you heard today. Their claim was that most folks are no longer interested in buying as they are renting. No long term obligation in case something goes wrong was the basis of their reasoning. As we both know, you can read all kinds of reports as both sides of the reports have an agenda. It is what it is, and it ain't all bad out there right now. Still on the slow side but it certainly beats the all out we had back in 2006 when we were more busy begging subs just to show up than actual building. At least builders have control now of their production. I would think that rental investment is going to pay off in the near future.
One of my cuzins is in the local politics in one of the small towns south of here and they've been working on infrastructure for the last 6 years. According to him, with all of the impact studies that are required, it takes 8-10 years to get a permit from the State to drill a large well for public water. I put a few deals together for him with already in place irrigation wells that they could convert a lot quicker. They are already planning the future plat of the city and are putting several plots together for TERZ. Should be interesting as they feel the area is going to explode with business.
The other half and I were at Herman Sons in Hondo a few months ago and SAWS was there giving a program to ranchers about contracting water rights to SAWS. My cuzin at Sabinal is working with SAWS now for water rights. I think of any of the SA agencies, SAWS has it going on for the city's future. I'd agree with the assessment about housing in the small towns in deep South Texas. A friend works for Palm Harbor Homes and they are running all out with mobile homes going into the Eagle project. It's been an EXTREMELY profitable thing for him- kinda like hitting the lottery, really.
I just read an article about the SA New Residential Construction that contradicts what you heard today. Their claim was that most folks are no longer interested in buying as they are renting. No long term obligation in case something goes wrong was the basis of their reasoning. As we both know, you can read all kinds of reports as both sides of the reports have an agenda. It is what it is, and it ain't all bad out there right now. Still on the slow side but it certainly beats the all out we had back in 2006 when we were more busy begging subs just to show up than actual building. At least builders have control now of their production. I would think that rental investment is going to pay off in the near future.
One of my cuzins is in the local politics in one of the small towns south of here and they've been working on infrastructure for the last 6 years. According to him, with all of the impact studies that are required, it takes 8-10 years to get a permit from the State to drill a large well for public water. I put a few deals together for him with already in place irrigation wells that they could convert a lot quicker. They are already planning the future plat of the city and are putting several plots together for TERZ. Should be interesting as they feel the area is going to explode with business.
Would love to read that article if you can find it. Want to hear all sides.
What I can tell you from my personal experience in the biz is that I sold more homes in 2012 than ever before, and I've had some VERY good years in the past. I've also got 6 buyers I'm presently working with, whereas I'm usually working with two or three.
I just see it as Americans spend money. That's what we do and there's only so long we can sit on the sidelines. I know a lot of people are interested in renting right now, which is why the rental occupancy is so crazy, but eventually those rents are going to keep rising because of demand, and then you're still looking at 3% rates. Not everyone, but a TON of people are going to realize it just doesn't make sense.
Time will tell, but we're really cooking already this year. Hoping it continues.
Just from what I see on the far-westside, I think the news and "forecast" is a bit optimistic, but I'm hopeful. I'm still seeing lots of folks leaving rentals when that was not in the plan- granted, they are renting quickly. We have lots of military renters in our area who have decided it's too risky to try and sell in 3-5 yrs.
kevcrawford, as a realtor, when do you think the shadow inventory will be used up and what about the expiration of the MFDRA?
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