Real Estate

San Antonio Rental Market Trends, November 2023


The rental market in San Antonio, Texas, is evolving rapidly, with several factors influencing both supply and demand. As a landlord, understanding these dynamics is key to navigating the current market and making informed decisions about your properties.


Supply & Demand Dynamics

Currently, there is a surge in the number of rental units entering the market, outpacing the rate at which they are being rented. This trend is due in part to homeowners who, thanks to low ~3% mortgage rates, opt to rent their homes instead of selling when they move.

Moreover, the conversion of some properties from short-term rentals (STRs) into long-term leased rentals further contributes to the growing supply. This increase aligns with the national multi-family market trends, as reported by CoStar Group, where supply has surpassed absorption for six consecutive quarters.  Since single-family rentals (SFRs) aren’t analyzed nearly to the degree that multi-family units are, we do utilize some of the metrics from that part of the industry to gauge similar metrics in the SFR world.

In the San Antonio Metropolitan Service Area (MSA), the multi-family vacancy rate was 11.3% at the end of Q2 2023, higher than the national average. As of summer 2023, more than 18,000 multi-family units were under construction in the San Antonio MSA.


Economic Factors Impacting Renters

Several economic factors are impacting renters’ ability to upgrade or move. Inflation is reducing renters’ purchasing power while student loan repayments have resumed, leaving less disposable income. Additionally, the prevailing economic uncertainty is causing people to save more, further limiting their spending on housing.

Simultaneously, multi-family properties are luring renters with concessions like one to two months of free rent and lower deposit costs. These strategies aim to reduce the high vacancy rates, which, according to CoStar Group, are highest in San Antonio among all 34 major multi-family markets having at least 150,000 units.


Residential Growth in San Antonio

Despite the current challenges, San Antonio remains a thriving city with significant residential growth. The Census Bureau ranks it third among metro areas with a population of two million or more in terms of residential growth.  More on this below.

San Antonio’s multi-family construction pipeline is breaking records with over 18,000 units currently underway. New multi-family properties are focusing on community, access to amenities, and proximity to mixed-use areas to attract tenants.  While these numbers are staggering, it’s important to note that multi-family construction starts are trending downward slightly.  This will certainly help to ease the current housing oversupply in the area.


Future Outlook

Bexar County, where San Antonio is located, is projected to be one of the five fastest-growing counties in Texas, expecting to welcome over 1.6 million new people by 2050.  San Antonio’s lower cost of living and diverse job market helped to boost its population. Since the 2010 Census, the metro’s population has expanded by 20.8%. With job growth outpacing the national average and an attractive lifestyle, demand for rental units in San Antonio is expected to strengthen.

According to Axios, “San Antonio ranked the highest for numeric population growth (13,626) between 2020 and 2021, meaning more people relocated here than any other place during the height of the pandemic.”  Then continued, “San Antonio grew by 18,889 people between July 1, 2021, and July 1, 2022,” according to the US Census Bureau.  A Q3 2023 report from Lightcast projects the MSA’s growth at over 141,000 more people in the next 5 years.

The same Lightcast report shows the last 5 years job growth at over 80,000 (6.9%) and projects the next 5 years to grow by another 115,000.  Our last 5 years growth also outpaced the national average by 3.1%.  The last 12 months saw nearly 24,000 area companies posting available jobs.  Some of these companies with the largest number of postings are Methodist Healthcare, H-E-B, The UT System, HCA Healthcare, USAA, Christus Health, and the City of San Antonio.  This doesn’t even include the companies moving into the area, like JCB.  The San Antonio MSA is clearly showing signs of plenty of healthy job growth.

What should you do if you currently have a vacancy or will have one soon?  Read our next post for our recommendations to fine tune the leasing approach.