A few years ago, Austin’s housing market saw a surge in demand, driving home prices to unprecedented levels. Today, the market has cooled, showing signs of stabilization, but affordability challenges persist.
Key Points: Austin is undergoing a market correction following an unsustainable rise in home prices. Though the market is stabilizing, home affordability remains a significant concern.
- Home prices in Austin have dropped 6.6% year-over-year, but this dip barely offsets the massive gains seen during the pandemic. Prices are still almost 50% higher than they were in early 2020.
- Austin Board of Realtors President Kent Redding suggests that policy reforms are necessary to address the city’s ongoing affordability crisis, as the market alone won’t resolve the issue.
- With the pandemic real estate boom behind them, Central Texas buyers and sellers are adjusting to a more balanced market dynamic.
The latest housing report from Unlock MLS portrays Austin’s market as different from many other regions in the U.S.: home prices are decreasing, pending sales are on the rise, and inventory levels are hovering around six months.
Austin by the Numbers:
Inventory has leveled off after fluctuating over the past year. As of September, the Austin metro area had 12,153 active listings, a 11.6% increase compared to the previous year.
Inventory has leveled off after fluctuating over the past year. As of September, the Austin metro area had 12,153 active listings, a 11.6% increase compared to the previous year.
However, new listings saw a slight decline of 0.1%.
Home prices also dropped: the median price, $425,000, reflected a 6.6% decrease year-over-year.
Despite this, prices are still significantly higher compared to the national average, which is currently experiencing a 4-6% increase. While the decrease signals a softening market, it’s a far cry from a crash, especially given the rapid price escalation between 2020 and 2022.
Further price declines may be on the horizon if demand continues to wane. In September, pending sales rose, but the average days on market stretched to 79—10 days longer than a year ago and well above the national average of 55 days.
Meanwhile, sellers are adjusting to the new reality. The average sale closed at 92.8% of the list price, down from 93.2% last year.
According to Clare Knapp, housing economist for Unlock MLS and the Austin Board of Realtors, the market’s unsustainable pandemic boom has created lingering effects.
Buyers rushed into the market between 2020 and 2022, driving up prices and causing an imbalance with national trends.
Will Prices Continue to Normalize?
Many anticipated a larger correction, especially with inventory at balanced-market levels. However, sellers still maintain some influence, which has kept prices relatively high.
Many anticipated a larger correction, especially with inventory at balanced-market levels. However, sellers still maintain some influence, which has kept prices relatively high.
The “mortgage rate lock-in” effect is also playing a role, preventing some homeowners from selling, and contributing to the current dynamic.
Pending sales saw a 20.2% boost in September thanks to slightly lower mortgage rates. But with rates creeping back up and the job market softening, Knapp expects a slower-paced, balanced market until spring unless rates decline significantly.
Affordability Remains a Key Challenge Despite the market’s stability, affordability remains a pressing concern. Kent Redding, President of Unlock and the Austin Board of Realtors, stresses the importance of policy reforms to tackle these issues.
He encourages voters to support candidates committed to affordable housing solutions as the upcoming election approaches.
“Central Texans need to support policies that will reduce barriers to housing and help communities expand their housing stock to keep up with our growing population,” Redding emphasized.
As Austin’s real estate agents continue to adapt, Knapp notes their optimism: “Realtors are resilient and find ways to thrive in any market. There’s hope for the future, but it’s clear this isn’t the market many expected for Austin.”