Homebuilding jumped in San Antonio in 2021, but rising costs and shortages drove prices up

Builders rushed to build a record number of homes in the San Antonio metro area in 2021 as demand surged — and even more homes are expected to rise this year.

But rising costs and shortages of labor and building materials have driven up prices and caused delays in finishing homes.

Builders began work on 21,196 homes in 2021, up 29.6% from 2020 and 53.4% ​​from 2019, according to research firm Zonda. It’s also a 7% increase from the 2006 peak before the Great Recession.

“This is the highest number of annual housing starts San Antonio has ever seen,” Zonda senior vice president Lawrence Dean said.

Low interest rates, tight inventory, newcomers moving to the area, and people wanting more space as they turn to remote working have boosted demand for new homes and resold last year.

Housing starts are expected to reach 22,500 this year before declining slightly due to rising interest rates and prices as well as the satisfaction of some demand.

“Does that mean we think there’s going to be a big cataclysmic event like in 2008? No, none of that,” Dean said. “Just sort of a steady stair step towards a maybe more ‘normal’ volume range.”

Crews work on houses under construction at Converse on January 14, 2022.

Jessica Phelps /San Antonio Express-News

The majority of homes started last year – 57.4% – cost between $250,000 and $399,999. Another 21.7% costs $249,999 or less and the rest costs $400,000 or more.

Housing starts for homes priced below $200,000 have steadily declined over the past decade, falling from 54% of the market in 2011 to just 3% in 2021.

This is because the costs of land, labor and building materials are rising, making it more expensive for builders to build homes at lower prices, Dean said. Shortages also mean homes take longer to complete.

Many homes started last year are going up in the far west and New Braunfels, but construction is also increasing in southwest and southeast Bexar County and Seguin.

Dean attributes this to land availability, population growth, Toyota’s South Side campus, Navistar plant, and remote work opportunities.

“People are ready to live longer,” he said.

KB Home completed sales of 1,151 homes in the area last year and expects that number to grow significantly in 2022, San Antonio Division President Rob Wasyliw said.

“For us and for most builders right now, the majority of the problem isn’t demand,” he said. “It really comes down to production, and production is still very limited. There are labor shortages. There are material shortages. There are bottlenecks.

The cost of materials such as wood and PVC pipes has increased, and it has become more difficult to obtain drawers and doors for cabinets due to blocked ports, Wasyliw said. It takes about three months longer than usual to build houses.

KB Home will open three communities in the next quarter — one in Boerne, one in Seguin and one in south San Antonio, all of which are hot markets, Wasyliw said.

There is more land for builders to develop and lower prices, good schools, more jobs and remote work opportunities attract more buyers to these areas.

Wasyliw expects demand for new homes to continue to be strong in 2022 locally and statewide due to the strong economy and growing number of employers moving here.

“I’m optimistic about San Antonio, about the future of growth in San Antonio,” he said.

To help builders and suppliers find workers, the Greater San Antonio Builders Association participates in the City of San Antonio’s Ready to Work program, which will offer job training as well as associate and license programs.

The GSABA is asking members to post job vacancies on its website, with a target of 100 postings by March 1. The organization also plans outreach initiatives, including presentations at St. Philip’s College and the University of Texas at San Antonio.

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