While Houston and Austin grab headlines for their explosive population and industry growth, the incredible economic performance of other Texas cities like San Antonio and Dallas is rarely mentioned. San Antonio in particular is currently on a roll, and the city’s economic performance exceeds many of its Texas neighbors in key areas. The city ranked fourth out of 100 U.S. metro areas in the Brooking’s Institution’s Metro Monitor released at the end of 2014. That document aggregates jobs data, house prices, unemployment and economic output to rank the largest 100 U.S. cities. San Antonio’s strong showing is no fluke, and the city was similarly ranked on the Metro Monitor last year.
The city’s thriving economy makes it an ideal location for single-family rental home investment, and individuals who want to expand their current portfolios with investments that provide a consistent yield should consider San Antonio real estate.
The key economic players
San Antonio’s economy is highly dependent on government employees, thanks to a high density of installations that bring military personnel from across the country to the San Antonio area. Forbes reported that the military’s Base Realignment and Consolidation program brought many military members and their families to the area and encouraged them to live closer to the city’s various bases. The influx of government employees has been matched by private sector expansion that provides the services necessary to support the area’s new residents.
This has spurred growth in the area’s construction and professional fields, both of which grew significantly in the 12 months prior to December 2014. As more people find work in San Antonio and benefit from the area’s consistent economic improvement, the need for rental properties is likely to increase. While San Antonio’s housing market is currently less competitive than Austin or Houston, there are signs that inventory is decreasing and prices could rise shortly. Investors who want to maximize their returns should probably act soon.
A strong housing market
A glance at statistics from the San Antonio Board of Realtors (SABOR) reveals that new listings for homes have declined over the past six months, while the average list price has increased. In an interview with ABC affiliate KSAT, SABOR Chair Mary Ann Jeffers said, “Our biggest issue is the inventory. We’re still at 3.9 months of inventory.”
That lack of inventory is kicking up home prices, and builders are targeting the expensive end of the market with new homes. Market researcher Metrostudy found that San Antonio initiated more new home starts this year than they have since 2008. The majority of these new homes are going to cost more than $200,000, and Metrostudy found a decline in the number of starts below $200,000. This is likely to increase the demand for lower-priced homes, which in turn will make even less-expensive homes more costly.
As a result, many San Antonio residents will likely seek single-family rental housing. This has always been a popular option in the area, as military personnel who frequently move often eschew home buying, but rising prices will push more people to rent rather than own.
The investment opportunity
For investors, this is an ideal time to enter the San Antonio market. Houses remain relatively inexpensive, and looming demand for lower-priced homes is likely to drive the need for rental properties. With HomeUnion, it’s easy for any investor to enter the world of SFR investments. Investors who register on HomeUnion’s site can view prevetted properties in some of the country’s best SFR markets. These homes were selected through a combination of deep data analytics and in-person evaluations. Once an investor chooses a home, HomeUnion can provide financing through an in-house lender and handles property and asset management. With HomeUnion, SFR investments can be a painless and valuable addition to any portfolio.