As the largest of the contiguous states, the Texas real estate market is home to a variety of housing markets. There are many hallmarks of the Texas real estate market, particularly cheap house prices, high rental income, and steady property appreciation. One of the state’s top-performing markets follows these trends, and many others, to a tee. The market of discussion is the San Antonio real estate market. What are the San Antonio housing market trends in 2020? What are the best San Antonio neighborhoods for investment? Keep reading to find out!
Is San Antonio a Good Place to Invest?
If real estate in San Antonio has not been on your radar as an investor, you might be wondering: Is San Antonio a good place to invest? The short answer is yes. The San Antonio real estate market is currently one of the best markets in 2019 and is ranked highly in overall real estate prospects for 2020, according to the PwC.
We here at Mashvisor will also prove to you, dear real estate investor, that the San Antonio housing market is exceptional. Here is the investment data of the average San Antonio real estate investment, according to Mashvisor’s investment property calculator. To learn more about how our rental property calculator works, click here!
- Median Property Price: $282,120
- Price per Square Foot: $206
- Price-to-Rent Ratio: 15
- Rental Income: $1,564
- Cap Rate / Cash on Cash Return: 1.1%
- Rental Income: $2,478
- Cap Rate / Cash on Cash Return: 3.1%
- Occupancy Rate: 55%
You might notice that we have included data about Airbnb San Antonio vacation rentals. This begs an important question, is Airbnb legal in San Antonio?
Is Airbnb Legal in San Antonio?
Short-Term Rental Types
San Antonio’s Airbnb regulations classify vacation rentals into two types, each being rented for less than 30 days. Type 1 rentals are owner-occupied. A non-owner occupied rental, on the other hand, is considered a Type 2 rental.
A San Antonio Airbnb host must register an Airbnb property with a permit. The application comes with a $100 registration fee. Hosts must renew the permit every 3 years. Renewals come with an additional $100 fee. Investors also require proof of insurance and proof of registration for permit applications.
Hosts in the Airbnb San Antonio real estate market are also required to pay a combined 16.75% Hotel Occupancy Tax (HOT). The HOT includes many taxes, such as the City Lodging Tax (9%), State Lodging Tax (6%), and the Bexar County Lodging Tax (1.75%).
San Antonio Real Estate Market Trends for 2020
Aside from being a profitable rental market, there are many trends the San Antonio real estate market has that will benefit property buyers and landlords. Here are the five most notable real estate trends of the San Antonio housing market.
Affordable House Prices and Cost of Living
The most striking feature of San Antonio homes for sale is how inexpensive they are. As seen from Mashvisor’s data, the median San Antonio investment property price is $282,120. This is considerably lower than both the national median price of $325,200 and the state median of $324,836.
San Antonio also exhibits a low cost of living, which is beneficial to both real estate investors and tenants. San Antonio’s cost of living is 3.3% lower than the US, as it has the 36th lowest cost of living in the nation. The cost of living in the San Antonio real estate market is also lower than in multiple cities in Texas. According to NerdWallet, based on the Texas average household income of $70,000, San Antonio’s cost of living is lower than the cost of living in:
- Plano (by 21%)
- Dallas (by 20%)
- Midland (by 12%)
- Austin (by 9%)
- Odessa (by 8%)
- Houston (by 7%)
- Beaumont (by 7%)
- Conroe (by 6%)
- Corpus Christi (by 5%)
- Lubbock (by 5%)
- Abilene (by 4%)
- Nacogdoches (by 4%)
- Longview (by 3%)
- Tyler (by 3%)
- Waco (by 2%)
High Appreciation Rate
The San Antonio real estate market also benefits from a high property appreciation rate. According to NeighborhoodScout, the expected appreciation rate of the San Antonio real estate market for 2019 is 5.65%. This rate is expected to reduce in 2020 but will remain relatively high compared to the state and national rates. According to Zillow, San Antonio house prices will rise by 2.7% in 2020.
The San Antonio real estate market 2020 will also continue its economic growth, a great indicator for its traditional investing market. SA’s diverse economy, with sectors in military, health care, financial services, oil and gas, and tourism, is expected to grow by 39.6% in the next ten years. This is well over the US average of 33.5%.
The city also has a GDP growth rate of 4.6%, which is the third-highest among big metros, according to Business Insider. To top it all off, San Antonio has the fourth lowest unemployment rate among big metros at 2.6%, which is also considerably lower than the Texas and US average unemployment rates.
Investor and Tenant Demand
Demand will continue to be high in the San Antonio real estate market in 2020. Investor demand and development and redevelopment opportunities, in particular, are projected to be high, according to the previously mentioned PwC report. Real estate transactions have generated over $7.3 billion in 2018 and early 2019, and there is an expected increase in 2020.
As it pertains to being a buyer’s market or a seller’s market, San Antonio is a very hot seller’s market, according to Zillow. San Antonio has also been experiencing a high population growth over many years, boosting tenant demand. From 2010 to 2018, the city’s population increased by 17.5%, adding 375,000 new residents. The interplay of these trends will lead to a significant increase in demand in the San Antonio real estate market 2020.
Top-Tier Tourist Destination
Airbnb San Antonio has benefited from clear and helpful legislation, which we have discussed, and from the city’s tourism. With an estimated $13.6 billion impact on the city’s economy, San Antonio’s tourism has helped Airbnb hosts obtain a huge investment profit. In 2018, Airbnb San Antonio real estate investors generated a combined $27.6 million, with an average of $105 per guest.
Best Neighborhoods in San Antonio: Traditional Rental Strategy
Now that we’ve discussed why you should invest in San Antonio real estate, let’s talk about where to invest in the San Antonio real estate market 2020. According to Mashvisor, the best neighborhoods in San Antonio for traditional investing are Springvale and Prospect Hill.
- Median Property Price: $133,633
- Price per Square Foot: $111
- Price-to-Rent Ratio: 9
- Rental Income: $1,244
- Cap Rate / Cash on Cash Return: 3.3%
- Median Property Price: $155,873
- Price per Square Foot: $106
- Price-to-Rent Ratio: 13
- Rental Income: $996
- Cap Rate / Cash on Cash Return: 2.6%
Best Neighborhoods in San Antonio: Airbnb Rental Strategy
What about Airbnb San Antonio? According to Mashvisor, the best San Antonio neighborhoods for Airbnb investing are River Road and Gardens at Brookhollow.
- Median Property Price: $335,000
- Price per Square Foot: $202
- Price-to-Rent Ratio: 18
- Rental Income: $6,819
- Cap Rate / Cash on Cash Return: 13.7%
- Occupancy Rate: 52%
Gardens at Brookhollow
- Median Property Price: $253,750
- Price per Square Foot: $148
- Price-to-Rent Ratio: 13
- Rental Income: $4,553
- Cap Rate / Cash on Cash Return: 9.7%
- Occupancy Rate: 61.5%