And Are They Coming Back?

San Antonio home buyers disappeared in July. July statistics for closed home sales were the worst on record dating back at least 10 years with July sales falling to 1,491 from 1,987 one year ago, a 25% decrease. However, not all is doom and gloom as July “Pending” status sales were only off 15%. And perhaps a more accurate look at the San Antonio housing market shows total closed sales for the year are still UP by 6% for 2010.

There is no doubt that the government tax credits goosed the housing market a bit through the first tax credit in 2009 and the extension through 2010 (under contract by April 30 and closed by June 30). This moved many buyers forward and may even have pulled a few new buyers into the market that were not previously quite ready to buy but wanted to take advantage of the tax credit. NAR surveys tell us that the bulk of the home buyers were not in the latter category. So where does all this leave us? To figure that one out we’ll have to look at both local and national factors that affect the housing market.

A ”Buyer’s Market” and a “Seller’s Market” are generally characterized by supply. A 6 to 6 1/2 month supply is considered a balanced market so anything above or below those numbers indicates whether the market is favorable for buyers or for sellers. Example: a 5 month supply of homes is a seller’s market and an 8 month supply of homes is a buyer’s market. Currently in San Antonio, TX. we have an 8.4 month supply of homes through the end of July, 2010. However, this number is skewed higher by the large oversupply in the higher price ranges. Examples:

1. $350K-$400K = 16.47 months supply
2. $500K-$600K = 20.62 months supply
3. $800K-$900K = 52.89 months  supply

However, the bulk of sales in the San Antonio housing market fall under $200K. Let’s look at those markets:

1. $100K-$125K = 5.39 months supply
2. $125K-$150K = 6.46 months supply
3. $150K-$175K = 6.68 months supply

So we can see that we are waaaay oversupplied in the upper price ranges and for the most part have balance in the price ranges that most San Antonio home buyers participate in. Obviously then if you are a homebuyer in these upper price ranges you are in a buyer’s market and that if other factors are in place then it may very well be a good time to make a great deal.

Another factor is affordability and interest rates play a huge role in that. Right now interest rates are at historic lows with some buyers getting rates in the low 4′s and the average around 4.5%. This is about as close as you can get to free mortgage money and makes buying a home incredibly affordable and perhaps a once in a lifetime opportunity. Examples:

1. $150K mortgage/30 years @ 4.5% = $760.50/monthly P & I (principal & interest only)
2. $250K mortgage/30 years @ 4.5% = $1267.50/monthly P & I 
3. $350K mortgage/30 years @ 4.5% = $1774.50/monthly P & I

Pretty darn affordable isn’t it? You bet! Of course you still have property taxes and insurance to pay but it’s easy to see how current interest rates make owning a home in San Antonio, TX. very affordable.

So to answer the question of where did all the San Antonio home buyers go you have to know in what context you are discussing. Statistics show home buyers have taken a breather after the government tax credits expired. Statistics also show that we have a definite buyers market in the San Antonio price ranges over $225K and that we have equilibrium in the $100K-$175K range. We will have to monitor the closed and pending sales in the months to come but I believe that home buyers will re-enter the housing market to take advantage of low interest rates and a very affordable market. What do you think?

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