Housing Market Report | Is The Insanity Over?| August 2021

Welcome to the San Antonio housing market report August 2021

Today, I want to discuss with you; what’s driving housing bubble predictions, mortgage forbearance, and the general San Antonio housing market.

Housing Bubble

The first and foremost thing that we’re seeing that is causing folks to say, “Hey, we’re in a housing bubble and it’s going to explode and we’re going to have all these foreclosures,” is the year over year price appreciation and how that’s accelerating. And understandably, it’s huge. Here in San Antonio the appreciation numbers are staggering as well. We will get to that shortly.

As of January 2021 according to CoreLogic, we saw a 10% a year over year price percentage acceleration nation wide. And then we saw a 10.4% acceleration in February, March was 11.3, April 13%, and May 15.4%. So just year over year, that’s a huge increase and we had huge increases in 2020, so with 2021 more big increases. And that is really alarming to some folks.

Locally here in San Antonio as you can see above we are also showing even stronger year over year price appreciation growth.

Now if we go back and we look at 2006 and compare we would find high appreciation yes. But the differences in how we got there are very striking.

We had a lot of ‘subprime’ borrowers in the market and that can be anyone with a 620 or less credit score. 2006, there were $376 billion worth of subprime mortgages in the marketplace.

Fast forward to 2020, $74 billion.

So $376 billion versus $74 billion. Huge difference, very stable buyers in the market right now.

Ad in the fact that when COVID hit, we saw the standards for even borrowers that were above 700 go way up. Lenders started questioning everything. So even now, yes, they started relaxing a little bit, but they’re still very strict. They’re looking at everything very closely. So you can’t just walk in and get loan like you could back in 2006. The over all housing market is very strong.

Mark Fleming chief economist at First American is quoted below on this issue.

Mortgage Forbearance

Forbearances is another key factor folks are looking at thinking, “Okay, here comes a bunch more foreclosures.” 1.8 million was a calculation. Let’s look at those numbers now.

The original projection for forbearance projected by the First American Mortgage Bankers Association was that 30% of all loans were going to be in forbearance. That did not happen. It came out to 8.47% of all loans actually went into forbearance, now only 3.5% remain in forbearance.

Digging deeper into that below let’s look at what is happening to people exiting forbearance.

As you can see above out of the total homes in forbearance 44.1% were paid in full. Next 38.7% worked out a repayment plan with their lender and now they are back on track and making payments.

Now the troubling number there is 17.2% of borrowers that exited forbearance without a plan. So they haven’t made arrangements with their bank. But on the flip side of that, the good news, according to Black Knight, which is another data company, reports that around 90% of homeowners have at least 10% equity in their home. So even these folks in that 17.2% group have options.

Market Changes In San Antonio

Overall in the San Antonio market we remain in a strong sellers market. Carefully priced homes still attract multiple offers over asking and are often under contract in a matter of a few days at most. There are some homes I have noticed staying on the market for longer periods of time and often follow with a sizable price decrease.

Sellers should be careful to not over price their homes and follow solid fundamental strategies to attract multiple offers. Overpricing homes will most likely lead to less desirable results as cautious buyers are now passing on overpriced homes and new inventory is being added to the market to compete.

Bottom Line

This sellers market continues to be driven by low supply and record low interest rates with more room to run. We expect that affordability will at some point become an issue and naturally temper the price increases and return to more normal growth.

San Antonio’s housing market has continued to be the beneficiary of positive net migration and we expect it to continue to do so into the future. This alone provides further expectation of a strong sellers market in the short term and perhaps for years to come.

If you have any questions let’s connect. Schedule a free consultation below.