Rents have fallen in San Antonio.
Estimates range between a 2% and 3.5% drop compared to previous years and experts agree that it’s a good time to be a renter. A development boom at the beginning of the decade has led to historically high vacancy rates and landlords are offering concessions or reducing charges to get tenants in the door while profits dwindle.
But those good times for renters might not last. The post-COVID development wave has largely subsided. Danny Khalil, CoStar’s director of market analytics, said that construction has slowed down and the demand for apartments will catch up.
“The supply cliff is real, or it’s going to be by late next year,” Khalil said.
CoStar projects the market to flip back in 2027 or 2028. That could mean rising rents and a tough market could return later this decade, which housing advocates fear will impact San Antonio’s lowest-income residents the hardest.
Development bonanza leads to massive supply
In 2024, between 13,000 and 14,000 new apartment units were completed in San Antonio, said Ryan Baldwin, executive director of the San Antonio Apartment Association. Baldwin is a property manager who works with apartment owners and operators through the SAAA.
“Since the fourth quarter of 2022, deliveries have been crazy in this market. San Antonio and Austin both have had some of the highest deliveries in the country,” he said.
Investors had money to spend and housing was a good bet.
“We’re in what’s called a hypersupply when you look at a real estate cycle,” said Pete Alanis, executive director of the San Antonio Housing Trust.
“A lot of investor pools, whether it’s private equity or tax credit equity … they look around the country and see where they’re going to build,” Alanis added.
Texas and San Antonio were popular destinations for several years.
Khalil said the 2022 Affordable Housing Bond, when the City of San Antonio allocated $150 million to maintain and incentivize cheaper housing, helped attract developers, as well. That had a particularly strong effect in the downtown housing market.
“It’s quite clear from the numbers that the introduction of supply shifts the market in favor of tenants,” Khalil said.
A good time to look for deals
At the beginning of 2022, 6.9% of San Antonio’s apartments were vacant. By the beginning of 2026, that number was up to 16%. Renters have far more options this year and it’s a good time to be looking for a new apartment, Alanis said.
Landlords are offering weeks without rent or waiving deposits.
“Folks are still offering you concessions to get in the door,” Alanis said. “For tenants, we’re in a good place to get good deals, especially at new buildings in prime locations.”
Baldwin said the opposite is true for landlords.
“There’s a lot of challenges for owners and operators,” Baldwin said.
Unfilled units and lower rents mean less profits and cash for people managing properties. In the short term, that can mean less amenities and delayed maintenance and upgrades, he said. In the long term, it can mean property sales and apartments going into receivership, where banks or lenders take over ownership.
“That’s not always best for the property,” Baldwin said. “In some cases, when that property is in that situation, those services aren’t available.”
Baldwin says he’s concerned that it’s hitting smaller, local landlords the hardest. Larger, institutional property owners can afford to take losses and even buy stressed properties and newly built properties have an easier time attracting tenants, but those with smaller properties or finer margins don’t have those luxuries.
The market will swing back
The development boom of the early 2020s has started to subside. Baldwin estimated that 5,000 new housing units would be built in 2026, less than half of what was finished two years ago. Khalil added that around 2,000 could be completed in 2027.
It takes time to create housing — apartment complexes aren’t built overnight.
“Construction starts are way down,” Khalil said. “Clearly, that’s going to change the market between supply and demand.”
Financing is not available in the same way there was a few years ago, Alanis said. “Right now, with the capital markets, they’re not as bullish on San Antonio,” he said.
Khalil and Alanis said that high interest rates make it more expensive for developers to fund new projects. They also make it harder for current renters to move out, get mortgages and buy homes, further constricting the rental market.
There’s also economic indicators that might make San Antonio less attractive to investors. Bankruptcies and unemployment are rising, according to data from the Bureau of Labor Statistics and U.S. Bankruptcy Court. People need good jobs to afford rent, Alanis pointed out.
But people are still coming to the area and moving into apartments. The vacancy rate has fallen from 16% at the beginning of the year to 14.9% in the third quarter of 2026, according to CoStar.
“We’re absorbing those units, but there’s still a lot of units to absorb. I think the timeframe for when we’ll be back in imbalance is a year to 18 months,” Alanis said.
When the market tightens up again, landlords will stop offering concessions and could start raising rents again. Khalil said that could happen late into 2027 and continue in early 2028.
What is being done?
“We’re monitoring that very closely,” said San Antonio City Councilwoman Sukh Kaur.
Kaur also serves on the board of the Housing Trust. This is part of the real estate cycle, she said, where supply and demand constantly dance around each other. She said council members are concerned about the housing supply issues on the horizon and are discussing a new housing bond in 2027, though the City of San Antonio might not have the bond capacity it had in 2022.
She suggested other strategies, including tax increment reinvestment zones, which could be used for affordable housing. Those are designated parts of the city where property tax dollars are set aside for specific projects instead of going into the general fund.
Kaur was part of the Midtown TIRZ board that recently decided to use those dollars for projects at Brackenridge Park, the San Antonio Zoo, the San Antonio Botanical Gardens and for a land purchase for the Spurs new stadium.
She added that the city was looking for opportunities to use federal grant funding for affordable housing projects.
“There are a lot of other ways we’re continuing to work on as a city and with our partners,” Kaur said. “That’s one thing a majority of council does agree on when it comes to spending public dollars.”
Alanis said the Housing Trust is trying to build more affordable housing in advance of any rental supply cliff. Even though capital is hard to come by, the nonprofit is being aggressive about acquiring land and working with city and VIA Metropolitan Transit officials on transit-oriented projects.
He wants to see smaller developments in urbanized areas that are close to existing infrastructure in jobs, also known as “missing middle” housing.
In the long run, housing development in San Antonio is tied to private investment, which public officials and nonprofits have little control over, Alanis said. That’s simply a part of living in a capitalist economy.
“If the demand isn’t there, investors aren’t going to come, lenders aren’t going to lend,” Alanis said. “That’s how things are built in our world today.”
He does see ways to make neighborhoods more attractive to investors by improving transportation, growing jobs and economies and creating better educational opportunities. The Housing Trust will do its part to make sure that out-of-town investors and companies are building housing that benefits communities and neighborhoods, he added.
Solutions need to include San Antonio’s lowest income residents, say Leticia Sanchez, a co-chair of the Historic Westside Residents Association, who works with families in her neighborhood who need housing.
Sanchez said, particularly if rents rise again. She’s seen homelessness spike on the West Side because residents have nowhere they can afford.
“They’ll be on the street. It’s not a difficult assumption to make. It’s already happening,” she said.
Sanchez said the 2022 Affordable Housing Bond could have done more. There weren’t enough units set aside for residents making 30% of the area median income, about $24,200 each year for a family of two, she said.
Many are on fixed incomes between $800 and $1,200 per month if they’re retired or disabled, she said. Others are working multiple, low-wage jobs. They can’t afford San Antonio’s median rent, which was around $1,300 a month, according to the most recent U.S. Census Bureau data.
Sanchez said there’s still a strong demand for public or subsidized housing, even in this renter friendly market.
An annual income of $40,000 is what’s needed for stable housing, she said. More than a quarter of San Antonio households make less than that, according to the Census Bureau’s data.
“There’s not enough apartments for our people and what they need,” she said. “It’s just getting worse and worse. That’s how landlords establish rates, they’re not looking at everyone who lives in San Antonio, they’re just interested in their profits.”
Sanchez was critical of incentives that went to developers who didn’t include enough of those types of units.
“We’ve given so much to these for-profit developers and we didn’t get much in return,” she said. “This is an issue that has a solution, but our leaders choose to listen to the wealthy and developers.”
