San Antonio Housing Market Update May 2022
In this month’s edition of the San Antonio Housing Market Update, we will take a look at, some leading headlines shaking up the housing market, mortgage rates, and new projections for home price appreciation.
First up let’s dive into a few headlines grabbing the attention of today’s home buyers and sellers.
May Housing Market Report – Banks Begin Laying Of Loan Officers
Wells Fargo starts the bad news headlines reporting on April 25, 2022, that it will lay off employees in the company mortgage department. Wells Fargo sites decline in sales to the tune of 21%.
As unfortunate as it is to see people losing a job. Some would take this headline above as a sign of an imminent housing crash but let’s read a couple more and decide from there.
Two days later Flagstar Bancorp cuts 20% of its mortgage staff totaling 420 employees.
And locally our own USAA bank lays off employees sitting placing blame on declining demand for home loans, and refinance business.
With a rising interest rate environment lenders will no longer see floods of refinance business at the levels seen over the last two years.
Will the housing market crash in 2022?
To begin formulating an answer to that question the best thing we can do is go back to the last time housing crashed and compare a few different points.
Home loan standards
If we compare home loan standards of the early 2000’s to the last 10 years you can see above how much stronger today’s homeowners are.
In the years leading up to the financial crisis risky lending practices and subprime borrowers flooded the market. This led to record defaults. As a result lending products were scaled back and borrower standards substantially tightened.
How Cash-Out Refinances Weigh On The Housing Market Today
To further illustrate the financial health of today’s home owner vs the owners of the financial crisis above is a graph that shows cash out refinance activity.
The years leading up to the great financial crisis and crash were full of refinance activity by borrowers ill prepared to pay their loans back. The end result was massive default numbers.
After the markets recovered starting in 2014 more cash out refinancing occurred, except this time well qualified home buyers using strict qualification processes as the new normal.
In 2020 as a result of covid 19 interest rates were slashed dramatically making any refinancing activity nearly a positive gain for home owners.
As a result we have a vastly different foundation of owners living in homes currently with record home equity.
What Is The Home Price Forecasts For 2022?
Each month experts from around the country forcast their own opinion about housing appreciation rates. FAnnie Mae, Freddie Mac, CoreLogic, HPES, NAR, Zelman and MBA are routinely used here to come up with an average appreciation forcast.
Last month the forecast came upt to an average of 6.1% appreciation. This month that forecast has risen to an average of 9%. This is big news considering the Federal reserves actions of increasing their benchmark rates designed to battle inflation.
So, for the time being we do expect home prices to continue rising in 2022. But what about beyond 2022? We will get to that point shortly. Let’s pivot to some local information on the housing market in San Antonio.
San Antonio Housing Sales Prices May 2022
Above here we are looking at the ‘Median’ or Middle Sales Prices. The median sales prices represent the vast majority of sales in the market. This is why you may hear agents using the median sales figures.
Over the winter San Antonio returned to a more normalized cycle of sales and saw a smaller over all increase in appreciation in prices at 2.69%.
Over the last month of the quarter in March San Antonio saw a surge in sales price appreciation to 5.07%. This is likely a reaction to news of interest rate hikes on the way and renewed buyer activity for the year.
For the 12 month period San Antonio saw an 18.37% increase in appreciation and 30.63% in the last 24 months.
What about foreclosure? Let’s check on that!
San Antonio Foreclosure Activity May 2022
Of course we need to look in on distressed properties for any market report to be complete. And yes there are a few but nothing even close to what would be needed to negatively impact home prices. As of May 10 2022 we have 13 properties in San Antonio in distress. 1 home is in the pre-foreclosure process, 4 are in foreclosure and 8 have officially been foreclosed on.
Yes conditions can and will change at some point. Something terrible might happen in the future to increase foreclosure rates. But as of right now it does not appear to be a short term or nearterm issue.
What does the market look like beyond 2022?
How long will home prices continue to rise?
How long will home prices continue to rise is certainly a question on the minds of homebuyers and homesellers. Home buyers and sellers should refer to local experts to answer that question as every market is different.
Some markets are adding higher numbers of people, while others are losing people. In both cases this may have opposite effects on housing prices. Here in San Antonio we are still seeing an influx of people so I would predict positive appreciation for the next few years at least.
Over all as a country HPES predicts in the graph above we will see positive appreciation for the next 5 years including this one. 2022 is predicted to see 9% home price appreciation, 2023-2026 HPES predicts over 3.42% appreciation in each year.
Finally, what will happen with interest rates?
What will mortgage rates go up to?
What will mortgage rates go up to this year? Well, you can probably get a different answer if you ask 10 experts every other day and repeat the next month. For now let’s see what Bill McBride has to say above.
Over all Bill believes there could be a possibility of 6% interest rates but thinks rates will most likely settle at around 5%-5.7%.
Bottom line
In the short term to near future experts are predicting we will see more home price appreciation. Massive loan defaults are not currently expected due to strong equity positions home owners now have.
And San Antonio is still poised for future growth.
If you are thinking about a move contact me today!
