San Antonio Housing Market Report June 2022
Are we In a housing market correction? Does a recession mean we will see a housing crisis? What are the interest rates doing right now?
So many questions plague buyers and sellers these days. We are currently smack in the middle of the summer sales season. And for the first time in two years we are witnessing a return to normal seasonal buying and selling patterns. Let’s get into this month’s housing market report!
Are we in a housing Market Correction?
Before we can give an answer to the above question we need to understand what the definition of a housing market correction is. For that definition we look to Investopedia today.
What Is The Definition Of A Housing Market Correction?
According to Investopedia “A correction is a decline of 10% or greater in the price of a security, asset, or financial market.”
With this definition in mind let us now pivot to the most recent home price forecast for 2022. This forecast uses 7 different sources to come to the conclusion that the housing market is projected to appreciate at an average rate of 8.9%.
If you have tuned into previous market reports you might remember that these same predictions also took into account assumptions that the FED or Central bank would be raising rates this year as well. More on that soon.
What about locally here in San Antonio? Glad you asked! 🙂
Is The San Antonio Real Estate Market Correcting?
As of this June the average San Antonio home is now selling at 15.4% higher than it was a the end of the 2021. That’s approximately only 6 months!
Will, this pace continue? I don’t really think so. The Fed is still raising rates. In fact as of this week rates went up again and I anticipate they will have at least a few more rate hikes before the busiest part of the home buying season ends. But that’s just a guess and only time will truly tell.
What about a recession? Will that tank the housing market?
Will a recession cause a housing market crash?
To begin to understand the effect of a recession on a housing market let’s take a look at 6 of the latest recessions. 1980 recession yielded 6.1% increase in home appreciation, 1981 yielded 3.5% housing appreciation, 1991 recession had a 1.9% pull back in pricing (not by definition a correction but negative), 2001 again yielded 6.6 appreciation, 2008 a recession with a 19.7% correction, and lastly 2020 recession brought with it 6.0% home appreciation.
So, based on this I would not bet on a housing crash solely on fears of a recession.
What Are Interest Rate Projections Looking Like?
As you may or may not know. Interest rates are historically tied to 10 year treasury note rates with the Central Bank set. Currently the Central Bank is raising those rates to battle inflation. As you can see there is a difference of about 2.2 between the 10 year teasury yield and the 30 year fixed mortgage rate.
Since December of 2021 the 30 year rate has sky rocketed as a result of the 10 year rate increases by the Central Bank. Most recently this year beginning around April 14 the 30 year interest rate has begun to flatten out.
In my opinion this is a result of refinance business drying up and some home buyers putting plans on hold as rates increase. As demand increases rates increase. As demand decreases rates have a tendency to fall.
Are Home Sales Falling?
Existing home sales through the pandemic have been at historic levels for two years. And finally look as though they are beginning to return to prepandemic levels. Currently we are at the 2020 high for sales and may soon return to 2017-19 levels nation wide.
How Is The Home Supply In San Antonio Performing?
When considering what inventory levels look like in any market, keep in mind that a balanced market is from 5-6 months worth of inventory. In a balanced market sellers and buyers are on more equal footing. When inventory levels fall below a balanced market it is considered a sellers market.
In the chart above you can see that inventory levels in San Antonio have been below 3 months from at least 2017 and have only gotten worse due to the 2020 demand spike.
Levels have been flat for the last few months right at the start of what is historically our busy season. Yes, we have seen an increase in listing activity but buyer demand has continued to absorb the new inventory.
San Antonio Closed Home Sales 2022
As inventory numbers continue to be a problem here in San Antonio home sales have reached nearly as high this year as they did in 2021. Currently we are down by nearly 1 percent in home sales compared to last year yet still at elevated numbers compared to prepandemic.
Bottom Line
Inventory remains the number one issue the housing market faces. And although the central bank is tightening policy to tame inflation the desired effects of this policy shift may not begin to be realized for many more months. If you are thinking about making a move, let’s connect!
Krishna Perkins
