How the San Antonio condo market is changing to reflect today’s economic challenges
Strict lending practices for multi-family homes have caused San Antonio’s already struggling condo market to make some serious changes to stay afloat.
The fall of the national real estate market is the first obstacle to jump. Add to that the fact that many lenders are simply unwilling to provide condo financing, and it becomes increasingly clear that San Antonio is in for a bumpy ride.
From Condos to Apartments
One of the most obvious changes is that many builders and developers are turning their properties into rentals. Many of the new condo projects have been converted to apartment rentals, while others are just crossing their fingers and hoping the condo market improves soon.
Stricter lending standards
San Antonio condo developers who have chosen to keep their properties instead of renting are realizing that they must consider all their options due to today’s strict credit standards.
This seemed to be the sentiment at the San Antonio Downtown Alliance Downtown State Luncheon that was recently held as the Hyatt Regency. Centro Properties President Debra Maltz further confirmed what everyone was already thinking: that buying San Antonio condos in today’s market can be downright difficult.
In particular, builders are facing new credit standards that require 70 percent of a property’s units to be sold before they can obtain financing for a new project. Because of this, many San Antonio condo developers have abandoned condo sales in favor of leasing apartment units.
An excellent example of this is St. Benedict’s on South Alamo Street. The developers of this project have changed gear from a condominium building to rentable apartment units. The proposed Clay Street Flats and Steel House Lofts have also followed suit. The Clay Street Flats project is currently on hold until the developer can secure financing.
The challenges of securing financing in a difficult market
Even homebuyers with excellent credit and a solid 20 percent down payment find it nearly impossible to obtain financing on a new condo project. Many of the condo loans are also considered “jumbo” loans, so they require a much higher down payment.
However, some developers are finding ways to get around the strict lending standards and secure financing for their buyers through private bankers. Private bankers, either through the developer or the buyer, are common in many luxury condo developments, allowing homebuyers to avoid the hassle of obtaining financing through a bank lender.
Perhaps the only exception to the rule are condos in downtown San Antonio. Demand for downtown San Antonio condos remains strong, keeping this sector of the condo market healthy. The newly built Vistana, for example, is currently more than 70 percent leased.
Challenges in the residential market have a ripple effect in other markets, particularly the retail market. Because of this, changes must be made to San Antonio’s struggling condominium market so that growth in San Antonio can remain strong and the economy can remain dynamic.