San Antonio’s Rents Fell. It Still Makes My Shortlist.
San Antonio’s Rents Fell. It Still Makes My Shortlist.
By Daniel Erb | October 15, 2026 | Founder & CEO, EM Capital | Research & Underwriting for RIAs & Allocators | Author of The Allocation Memo
The apartment recovery will reward more than patience. Start with the right market, then find out how much of the recovery the seller has already charged you for.
San Antonio’s apartment rents fell roughly 7.4% over the three years through March 2026. That puts it near the bottom of the rent-growth rankings. It still makes my shortlist for an apartment recovery.
The reason is what may compete with your building next, not how painful the last three years were. Our Q3 screen shows five-plus-unit permits down 75% over two years, while renter-household formation exceeds permitting (absorption gap). The recent rent decline and the improving supply setup can both be true.
For an alternatives team choosing among real estate funds, that changes the question. I would give a San Antonio manager a hearing. I would ask a manager selling the same recovery story in Memphis to explain why fewer new permits will improve leasing when renter-household formation still trails permitting. And I would ask both how much of the recovery is already in the purchase price.
A bad rent chart can be the beginning of an opportunity. It is not the investment case.
The biggest permit decline does not win
Memphis has the largest permit decline of these three markets. San Antonio has the stronger supply-demand setup in our screen. Virginia Beach sits close to balance.
Selected markets. Rent history: March 2023–March 2026. Permit data through 2025. Source: EM Capital rent exports and Q3 report, p. 29.
This comparison tests the permit-collapse pitch. It does not pretend that all three markets had the same rent slump: Memphis and Virginia Beach had positive trailing rent growth.
In San Antonio, the screen’s positive absorption gap means renter-household formation exceeds five-plus-unit permitting. Memphis has a larger permit decline but a negative gap. Virginia Beach’s −0.03% is effectively near balance. The demand behind the supply cut matters more than winning the contest for the biggest decline.
Permits are authorizations, not completed apartments. These changes run through 2025; buildings already under construction can still compete for tenants. The screen gives me a reason to investigate San Antonio before the rent chart looks better. The next evidence I want is the property’s actual competitors, their delivery dates and the concessions they are offering.
San Antonio’s −2.51% is historical annual rent change, not a forecast of another three years of decline. Its five-year rent history was positive, at 1.70% a year, but still ranked 232nd of 234 source areas. Weak recent history does not disappear when we extend the window.
One free month can do a lot of work
An apartment recovery need not begin with an increase in the rent printed on the lease. It can begin when the building next door stops offering free months.
Camden described this mechanism on its second-quarter earnings call. Management discussed recent acquisitions with first-year yields in the high 4s and a path to the mid 5s as concessions burn off. Those acquisitions are evidence of the mechanism, not a San Antonio comparable or a promised yield for a private fund.
Here is the arithmetic. One free month is 8.3% of a twelve-month rent bill. Ending that concession lifts collected rent from eleven months to twelve: a 9.1% increase from the discounted starting point, even if the advertised monthly rent does not change.
Consider an illustrative building collecting $1.1 million after one free month on every unit. With $440,000 of operating expenses, net operating income is $660,000. Collecting the twelfth month raises revenue to $1.2 million. If expenses, occupancy and collections otherwise hold, NOI rises to $760,000, or 15.2%. This is a simplified illustration, not a reconstruction of Camden’s properties.
That is enough movement to make a fund presentation look impressive. It also happens only once for that concession. After the free month is gone, the next leg of growth needs another source.
For the committee, I would separate three things in the manager’s forecast: recovery from concessions and occupancy; increases in recurring rent; and improvements the manager expects to produce through operations or renovation. A market recovery can reward the whole competitive set. Skill can still lie in buying the right building, at the right basis, with enough financing runway to capture it.
The mistake is paying a premium for that skill without finding out what the market itself is expected to deliver.
Find out how much recovery is in the price
A stabilized yield is not a starting yield. If a sponsor leads with the yield after concessions end, ask for today’s NOI against the full acquisition and improvement cost. Then ask what the purchase price implies about how quickly the building must reach the higher number.
Next, move the recovery back a year. Keep the purchase price unchanged and show the additional carry, interest, reserves and any refinancing pressure. This is a timing test, not a prediction that the recovery will be late. A fund that can own through the delay is a different proposition from one that needs the rent turn to meet its financing calendar.
There is a cost to waiting, too. If competition tightens quickly, the manager who bought early may beat the investor who waited for clean rent growth. I am not asking a recovery investment to work without a recovery. I am asking what you are paying for it, and whether the capital can wait.
Where the 386 rankings fit
The home-price rankings remain useful. They answer a different investment question.
Our ResiAlpha model ranks 386 metros on three-year forward home-price appreciation. San Antonio is 19th, with a forecast 3.86% cumulative appreciation relative to the national median metro over the model horizon. That is a relative home-price forecast, not an apartment rent forecast, an absolute price gain or an annual return. [6]
For an advisor evaluating a client’s residential exposure, those rankings can identify markets worth a closer appreciation review. For an apartment allocator, I would then put the trailing rent history and the apartment supply screen beside them. The comparison tells you what you are relying on: a house-price outlook, the recent rental cycle, or an improving balance between renter demand and future competition.
Do not count agreement between these views as independent proof. Do not treat missing apartment-screen coverage as a negative call. The Q3 apartment screen covers ten selected markets, not all 386.
The ranking should change the next question you ask. It should not answer the investment committee’s last question for it.
Put your manager’s markets beside ours
The paid Residential Market Comparison companion lets you compare three metros side by side, then filter all 386 home-price rankings. It pairs those forecasts with available three- and five-year apartment rent history and the ten-market Q3 apartment supply screen. Sources, observation dates, original ranks and missing coverage are explicit.
Use it to check the markets a sponsor is emphasizing—and the ones it has left out. The full rent-history tables preserve the source coverage beyond the home-price universe, so a convenient match does not quietly become the entire dataset.
Become a paid subscriber to EM Capital research for the Residential Market Comparison and the accompanying Q3 research.
Start with San Antonio, Memphis and Virginia Beach. Then substitute the markets in the fund on your desk. Ask the manager to show where renter demand exceeds future competition, which part of the NOI recovery comes from concessions, and what happens if that recovery arrives a year later.
That is the case I want to hear before committing capital: why this market, how much recovery is already in the price, and whether the financing lets us own long enough to be right.
Sources and method notes
EM Capital apartment rent exports dated October 6, 2026; underlying San Antonio, Memphis and Virginia Beach series: Zillow apartment rents. Three-year period: March 31, 2023–March 31, 2026. Five-year: March 31, 2021–March 31, 2026. Rates are historical compound annual growth rates. San Antonio’s three-year source rank is 332/338. Rent-rank denominators include all original source areas and combine Zillow and Freddie Mac AIMI series; the Freddie Mac periods end December 31, 2025. Cumulative changes use unrounded source rates. Definitions and observation periods were confirmed by EM Capital research on October 8.
EM Capital, Q3 2026 Cross-Asset Real Estate report, p. 29. Selected permit changes through 2025 and proprietary apartment absorption-gap screen. The gap compares renter-household formation with five-plus-unit permitting in the report’s percent units. It is not vacancy, conventional net absorption or the distinct gap measure accompanying the home-price model.
US Census Bureau, Building Permits Survey definitions. Permits authorize construction; they do not measure current completions. https://www.census.gov/construction/bps/definitions.html
Camden Property Trust, second-quarter 2026 earnings call, July 31; company-published transcript distributed August 6. Management’s acquisition-yield discussion concerns other Sunbelt properties. It is not a San Antonio forecast. https://in.marketscreener.com/news/camden-property-trust-second-quarter-2026-earnings-transcript-ce7f50d2d981ff22
Illustration: 1/12 = 8.3%; 12/11 − 1 = 9.1%; ($760,000/$660,000) − 1 = 15.2%. Assumes the concession applies across the entire illustrated rent roll and ends fully; advertised rents, occupancy, collections and operating expenses otherwise remain constant. No fees, financing or capital expenditures are included in NOI.
EM Capital ResiAlpha 386-metro source workbook, January 2026 scoring, 2026–2029 horizon. Original ranks and supplied forecast values retained. Forecasts are cumulative home-price appreciation relative to the national median metro; negative relative values need not imply falling prices. These estimates and the apartment screen prioritize research; property and fund returns require separate underwriting.
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