The data, compiled by the San Antonio Board of Realtors, points to homes going for slightly less than the asking price and homes staying on the market longer. Elevated prices, higher interest rates and inflation are shutting out some potential buyers and delaying first time homeowners from moving up, said David Macpherson, economics professor at San Antonio’s Trinity University.
“People don’t want to give up those 3% mortgages,” Macpherson said.
What you need to know
Many homebuyers with available cash and worries about interest rates are purchasing higher-end homes, said real estate agent Deanna Guerrero with Keller Williams San Antonio.
She also said many homes priced in the $200,000-low $400,000 range are sitting longer on the market because many first-time buyers lack funds for a down payment or are concerned about interest rates and inflation.
“I see an ever-changing market everyday. It depends on who you’re working with,” she added.
Kristi Maxwell, agent with Sotheby’s International Realty, echoed Guerrero’s comments that financing was typically the biggest factor for most homebuyers in previous years. Today homebuyers have more considerations, such as weighing the costs of homeownership vs. owning a car or being a renter.
Some first-time home buyers that might want to trade up are staying longer in their “starter homes” due to the increased interest rates, Macpherson said.
“A big driver of keeping the supply of housing down is the high market rates,” Macpherson said. “The effect of that really reduces the supply, and that also has an impact on new homes too, since it’s more expensive for builders to borrow money to build homes, because typically they borrow money to pay for the construction.”
Put in perspective
Some of the current situation in the housing market has to do with factors dating back nearly 20 years, said Jose Trinidad, finance and economics professor at Texas State University.
“We had a short supply of housing during the entire Great Recession for over 10 years. Not that many new builds were being built, so that led to the short supply by the time the pandemic hit,” Trinidad said. “The pandemic may have been a trigger for a lot of millennials as they were also at the age of household formation, so that put upward pressure on the demand for houses.”
Getting that supply moving is compelling sellers to be more flexible. Trinidad said for the baby boomer generation, gains in their home values were tremendous, but many cannot opt to size down due to elevated prices and interest rates.
The bottom line
Trinidad and Macpherson said they expect at least a quarter of a percent of the current Federal Reserve interest rate to be cut this year, but do not expect much more than that to alleviate market pressures heading into 2025.
Getting that supply moving is compelling sellers to be more flexible than during the pandemic years. Out of the 1,424 homes sold in the San Antonio area last month, 841 of them were sold under the asking price, and 373 were sold at the asking price, said Erica Gillen Quintero with EXP Realty.
Much of the fluctuation in prices locally is also simply a matter of supply and demand working within all of the current circumstances, Macpherson said.
“When you start getting the actual price down to list and then less than 100%, that’s suggesting weakening in the housing market,” Macpherson said.
