“How’s the rental market in San Antonio?” I’ve been asked this question numerous times in the past few weeks, and the answer is simple: the rental market in San Antonio is booming.
Homes for rent are being snapped up off the proverbial shelves, and owners of rental properties are often in a newfound position of strength, with higher rental prices and multiple tenants to choose from. By the time you view the home, there might already be multiple applications on it.
Why the rental market boom?
There are several factors:
- It’s harder to qualify for a mortgage. Tightened lending regulations over the past few years have made it more and more challenging for homebuyers to qualify for a home loan. And even if they qualified in the past, the added scrutiny in the process can easily push a buyer into the “denied” pile. Even government backed mortgages, specifically FHA loans, have had an increase in costs (minimum downpayment remained steady at 3.5%, but MIP, or Mortgage Insurance Premium nearly doubled this year).
- Foreclosures. While San Antonio wasn’t nearly as hard hit as other areas in the country, let’s face it, we still have had an abundance of homes going back to the bank. With foreclosures or short sales on their credit, many more families cannot qualify for a loan. And many sellers (especially those who bought in 2006-2007) who want to sell have seen their home values impacted enough by these foreclosures that they can’t sell without losing money. So, their option is to rent those homes out, or to rent themselves until they can find the right buyer.
- Military. San Antonio is a huge military city with bases like Randolph AFB, Ft. Sam Houston, and Lackland AFB. Many military families are stationed in a location for just a few years, so it doesn’t make sense for them to buy (their home won’t have had enough time to build equity and overcome costs of selling).
- Relocations are up. With the recession, there was a sharp drop in the number of large corporations paying out relocation fees to bring on new employees or relocate existing ones to other cities. However, as the markets start to come out of this slump, we’re seeing more and more companies jump back in. Many individuals relocating to a new city for work want to take some time to get the lay of the land and become more familiar with the city they’re moving to before investing a ton of money in a house. So they rent for a year, or even two, and then decide where to go from there.
- Elections. Election season is always a funny time in real estate. The purchase of a home is often the largest financial investment most people will make. Elections bring out a sense of uncertainty: Who will be in power next? And what does that mean for me? For my job? For my tax status? All questions that leave potential home buyers stationed firmly on the fence. But they still have a place to live, and paying $1,500/month is far better in many people’s eyes than losing thousands on a bad investment or foreclosure down the road.
What does this mean for renters?
In a nutshell – higher prices and more competition. If you’re looking for a property to rent, make sure you are prepared to act quickly, and that you have all of your documents – application, proof of income, etc. – in a row early. If your credit is shaky, be prepared to put up an extra deposit. The more flexible and reasonable you can be, the better your odds of finding the right place for you and your family.
image courtesy of busbeytheelder
