San Antonio market crash??

Question

The one thing I keep hearing when I talk with other investors on the phone, especially newer ones, is that they are waiting for some sort of real estate market crash. A big price drop. When I've looked into neighborhoods in San Antonio where I've sold properties in the past doing research, even during the major housing crisis back in the late 2000's, I didn't see any major price drops. They only leveled off for a year or two. So my question to all the other BP members, especially if you invest in San Antonio, Texas or if you're familiar with the market, what do you expect to happen? I personally don't see any significant price reduction coming, but I'd like to hear other opinions.

Greg H. · Answer

I tell you what.  Every property you own, I will buy from you for 50% of its value. Deal?

I have been investing since 1988.  Recessions in Texas have been affected little since the recession in the late 80's.  2006-08 was a blip in Texas

Clint G. · Answer

@Stone Saathoff

Being in TX we are lucky. I don't see much change coming here unless you're in Midland/Odessa where the rig count is dropping like a rock.

Biggest changes I'm seeing on the coast right now are Airbnb's being converted to long term rentals during all of this.

Values where I am are holding steady, and for sure, they should hold steady in SA. Drop 50%? That's laughable.

Joseph Cacciapaglia · Answer

I think this will all come down to how long shutdowns last, and whether or not we have several of them. So far, San Antonio has held up incredibly well. Our management portfolio had close to normal collections this month, with only 5% setting up payment plans related to COVID-19 issues. Stimulus checks will go pretty far in San Antonio dollars, so I expect this month should be decent as well. We've seen about a 20% drop off in closings compared to this time last year, but well priced homes and multifamily properties are still selling very quickly.

I expect the type of properties that you and I deal with will continue to do well, unless this crisis goes on for a very long time or gets significantly worse. I've had a huge uptick in new investor calls from both coasts that are looking to move money to San Antonio, because of it's relative safety and long term economic outlook. I have had several investors that are taking a wait and see approach and others that are making very low offers. However, there are plenty that are still out buying, and happy that there is a little less competition. The majority of sellers seem content to wait to get their price, and are not moving at all right now. Of course, if this lasts 12-18 months, that won't continue to be the case. I don't think anyone expects that to be the case though.

Higher end homes were already moving a little slower here. I think we could see some additional softness in the $250K+ home market. Those properties have never worked as buy and holds here anyway. I have seen a little pull back in the larger multifamily properties, but the biggest move so far has been about 5%. That was a property that fell out of contract due to a failed 1031 in another state.

In the long run, I think this will actually help many of the lower priced Texas markets. In the last several years, we have already had a lot of people move here but continue to work remotely for companies in higher priced states. They're basically benefiting from a cost of living arbitrage. With a lot more people realizing that remote work is possible, I think we could see a decent uptick in the practice.

Greg H. · Answer

So how do you rate your assertions of a year thus far?

James Dobbins · Answer

No thanks. I never sell real estate. But if anyone needs to borrow cash, call me :)

The 2020 downturn is many orders of magnitude bigger than '08. Come on, you know that's true. Sellers are still living in the 2017 boom era. Get back to me this time next year and let's see the reality of the market.

Allen Wu · Answer

Do you still think SA will crash in today’s market?

Stone Saathoff · Answer

@Clint G. @Greg H. @Joseph Cacciapaglia

Thank you for sharing your thoughts. That's great insight.

James Dobbins · Answer

I believe 50% is being generous. If we don't recover in the next two years, I expect 80% deflation in housing. Anyone who has been investing through the past 3 recessions wouldn't be shocked at this. The economy was rolling over pre-COVID. COVID just compressed the recession process into weeks instead of months. San Antonio, specifically, had a rental vacancy of what? 6-7% before the crisis? Landlords will be slashing rents all over just to keep whatever tenants they have now. When the city lifts the hold on evictions, forget about it!

Stone Saathoff · Answer

Looking for answers specific to san antonio. That's a very negative outlook James. A 50% price drop? You can't be serious.

San Antonio market crash??

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