Possible rebound on horizon for San Marcos home sales

Real estate professionals say the housing market in San Marcos is poised for growth after six years of mostly flat or declining residential sales.

Reasons cited for the less-than-booming market in the past half-decade include the long drive time to jobs in Austin and San Antonio, coupled with a scarcity of well-paying positions in San Marcos; potential homebuyers' perceptions about local schools; and a city ordinance that prohibits more than two unrelated people from sharing a single-family residence.

But the most pressing factor that has slowed sales in San Marcos is also one of the simplest, said Barrie Breed, the San Marcos Area Board of Realtors president: There aren't enough homes on the market.

"In San Marcos, we have a really limited amount of inventory," Breed said. "There's no blame game, but we had a pretty no-growth attitude for a long time. When everyone was building and booming, we just didn't. The good news is we don't have the highs and lows as drastically as a market with a lot of inventory. Unfortunately, the highs aren't as high, either."

Developers are addressing that lack of inventory. For the first time in at least a decade, the City of San Marcos issued more than 200 building permits for single-family homes in 2012, according to data provided by the city. The 213 permits granted last year represent a 17 percent increase from 2011 and a nearly 40 percent increase from 2010, largely fueled by construction in subdivisions such as Blanco Vista and Cottonwood Creek.

Cottonwood Creek's developer, Randall Morris, a longtime developer, broker and owner of Century 21 Randall Morris & Associates, said real estate sellers have been limited by a lack of home selection, particularly in the $250,000–$350,000 price range.

"We're kind of behind the curve right now because there's a scarcity of finished lots for the builders," Morris said, adding that he plans to develop 1,250 more lots at Cottonwood Creek during the next eight to 10 years. "It's getting harder to get listings because inventory is down, and we don't have a wide enough range of housing categories in San Marcos that are available and ready to go. There's five or six nice projects on the drawing board, but until they actually go turn dirt and provide some housing inventory for us, we're just selling what's available."

Even still, Morris said he's optimistic about the real estate market in San Marcos. In mid-December, his company acquired the Century 21 Excell Team as well as exclusive rights to Century 21 in San Marcos and New Braunfels. In March, he also added two Wimberley firms—Century 21 Hill Country Properties and Jim Henderson & Associates—to his company's portfolio, bringing his number of real estate agents to about 100.

"The market's obviously improving," he said. "It's why I'm trying to make these acquisitions as quickly as I can, when it's down."

Need for long-term solutions

From a more long-term perspective, Morris said residential real estate growth will require more industry in San Marcos, and recruiting of industry will require a labor pool with college training.

"We don't have a lot of high-paying jobs here, and we all keep waiting for that one big company to show up and create $75,000–$125,000 salaries and bring 500 jobs here. But until that happens, we have to educate our workforce so we have a workforce that will fit that model. We have to kind of start at the bottom."

To create jobs, thereby creating opportunities to sell more homes, San Marcos should aggressively use incentives to lure large corporations, said Mark Sprague, a real estate forecaster and the author of a weekly newsletter on Austin-area homebuilding and development.

"You have very little industry, if any. Go recruit industry. Aggressively go after those corporations that make sense," said Sprague, the state director of information capital at Independence Title Co. in Austin. "And embrace that river. Instead of saying you can't look at it, you can't touch it, I think you should have some corporate campuses along the river. You can put very harsh parameters [in place] to protect the environment. If you could just walk along that beautiful river, I think you will have a phenomenal recruiting tool."

Three-quarters of San Marcos residents live in apartments, according to the 2010 census. A city ordinance that prohibits more than two unrelated people from sharing a single-family home has discouraged people from moving into houses and has limited builders' options, Sprague said.

"One of the things working against San Marcos is the ordinance that is basically aimed at the college, but the law of unintended consequences prevents me from building anything but a two-bedroom apartment," he said. "If I'm a nursing student, I want a home with not just one other nursing student but two others. I think that's something that needs to be looked at, not only because it's a college town, but because of the parameters of today's world."

Catering to students

The university is one of San Marcos' greatest assets, said Breed, a sales associate for Hart Properties, who added that a hefty share of her business comes from parents buying homes for their college-age children. She agreed the restrictions on unrelated residents have hampered real estate sales.

"The neighborhood folks don't want students, and I get it, but we've got to find another solution then," she said. "It really is a difficult situation because you'd like to put the students down by the university, where they don't have to drive, and alleviate congestion, but really there's not anywhere but up. And that's where the apartments are coming in."

The city's new comprehensive master plan, Vision San Marcos: A River Runs Through Us, also addresses student housing and other growth issues, she said. On

April 1, City Council voted to approve the plan on first reading. In addition, the city's SmartCode was adopted in May 2011 to encourage pedestrian-friendly development downtown while offering a variety of housing options and services, according to the city.

Changing impressions of schools

Another challenge is some people's negative perception of San Marcos CISD, Breed said. Breed, a parent of two San Marcos High School graduates, and several other business leaders are participating in a marketing campaign, Making the Grade! San Marcos, to counter that impression with more positive information about San Marcos schools.

"I might as well face the elephant in the room," she said. "I was on the school board for seven years, and a reputation is hard to change. I think we have a very good school district, but for whatever reason, there's a perception that I think is unwarranted. If you've got a kid who wants to achieve, they have every opportunity to do it here."

Breed's employer, Ron Hart, a broker and owner of Hart Properties in San Marcos, said he expects the San Marcos housing market to grow as markets eventually push down I-35 from Austin and San Antonio.

"Going forward, the future looks pretty bright," he said. "We're going to get our share. It may not be as fast as we'd like, but it's going to happen."