In that time, home sale prices in the metro Austin area dropped by 6.2%, with homes selling for a median of $424,990. The median sales price has fallen for five consecutive months, too.
Similarly, median rent prices in Austin have decreased by 5.4% for the year ending in November 2023, the second-largest decline among the 50 largest cities, per another Redfin study.
Austin is emblematic of the low-interest house-buying frenzy of the pandemic, and how quickly the real estate market can switch from undervalued to overpriced. With Austin’s home prices elevated above the national median, buyers have become more reluctant to purchase a home in that market, which has driven down prices in 2023.
Austin’s real estate market has become the victim of its own success.
In January 2019, the median price home in Austin was $295,000, slightly less than the U.S. median at the time, which was $298,800, according to Redfin data.
Due to its relative affordability, the city became a migration hotspot during the pandemic, as low interest rates and remote work attracted a surge of out-of-town homebuyers. In early 2021, Austin was the No. 1 migration destination in the U.S., according to Redfin.
However, all those new residents quickly drove up home prices in the market. At its peak in April 2022, median home sale prices in the Austin metro area reached $555,000 — an 88% increase from 2019.
Prices have since cooled, and are now at a median of $424,990 — still well above the national median of $408,732. For homebuyers, Austin is no longer the bargain that it once was.
Rental prices have followed a similar trajectory. After a surge during the pandemic, rents have become cheaper recently, largely due to newly constructed rental units and fewer people moving to the city, according to Redfin.
“The Austin housing market has whiplash,” says Daryl Fairweather, chief economist at Redfin. “Today, the market is tepid. Buyers have shied away due to high interest rates, so homes take about twice as long to sell as they did in 2021.”
“While it’s a tough situation for sellers right now, the reality is Austin got overheated and is settling back down to a more reasonable market,” says Fairweather.
Of course, the market could pick up if mortgage rates continue to decline. After peaking at 7.79% in October, interest on 30-year fixed mortgages declined to 6.95% as of Dec. 14, according to Freddie Mac data.
However, even with the discount, a lower mortgage rate is unlikely to offset the dramatic increase in home prices in Austin over the past four years.
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