After a dreary yet stable year for San Antonio’s apartment market in 2020, local rent prices saw a dramatic surge in 2021.
The monthly rent for the average apartment in December increased to $1,140, up from more than $988 at the end of 2020 — an 18.2% increase — according to Houston-based data provider ApartmentData.com.
“Each one of these classes [of apartment quality] are performing at levels they’ve never seen,” said Bruce McClenny, president of ApartmentData.com, in a San Antonio Apartment Association state-of-the-industry event held virtually Wednesday.
In 2020, the average rent rose just 1% as the pandemic hit renters and landlords hard, with property managers offering discounts to lure in renters. The amount of those concessions dropped dramatically in 2021, McClenny said.
The notable shift in pricing reflects trends in the single-family housing market pushing some potential homebuyers to instead rent apartments. Local single-family homes are more expensive than ever and inventory is very low, making affording and finding a house very difficult for many.
“There remains a critical shortage of single-family housing in the San Antonio market and throughout the country, which supports the demand for apartments,” said Will McIntosh, global head of research for USAA Real Estate Co., in a presentation to SAAA event attendees on the state of the U.S. and local economies.
McIntosh said he and many other economists expect the low interest rates seen since the start the pandemic to finally rise this year. That could make single-family homes even less affordable, further driving apartment demand, he added.
Jill Welborn, managing director in San Antonio for Greystar Real Estate Partners, said in a panel discussion that given activity in the local market as a whole, leasing demand in its properties is strong going into 2021 and she expects that to continue. Greystar’s local office manages 48 apartment complexes across San Antonio and Corpus Christi.
“I kept waiting on that impact [of the single-family market] on our apartment communities, and it was worth the wait,” Welborn said. “Market conditions worked in our favor last year, and that is not always the case.”
With housing costs outpacing incomes, city leaders are pushing to increase San Antonio’s supply of affordable housing. City Council recently adopted a 10-year plan to produce or protect more than 28,000 affordable housing units, and $150 million is allocated in the proposed 2022-2027 bond program going to voters in May, KSAT reported.
“It’s historic,” newly appointed Chief Housing Officer Mark Carmona said of the housing bond. “It’s the first time in our community that we’ll have something like this … in terms of the flexibility it provides and the leverage that it provides for additional funding to come in — both from the private sector and from the federal government, state government — to get these resources into the community.”
With the need and desire to build affordable housing, continued struggles for the construction industry spurred by the pandemic are also a concern for the city. Carmona said his team is looking at how supply chain issues, labor shortages and rising materials costs could affect construction as the city focuses on creating more ground-up affordable projects.
Prospera is one active local developer behind many low-income housing properties. Walter Martinez, housing policy adviser for the San Antonio-based nonprofit, said it is looking at opportunities for funding at both the federal and local levels.
The developer oversees 50 communities with about 8,800 residents across South Texas, the majority being people of color.
“[The housing bond program] offers an opportunity for more funding availability, to create more flexibility in funding for affordable housing,” Martinez said in the SAAA event.
Publication: San Antonio Business Journal