Austin House Prices Are ‘Going Back To Normal’

The housing market in Austin, Texas underwent a significant shift during the COVID-19 pandemic, with a surge in demand driving housing prices to unprecedented levels. Companies like Google and Amazon announced expansions in the area, drawing in professionals seeking new opportunities. The result was a frenzy of home purchases and rentals, as people sought to capitalize on low interest rates and the desire for more space.

According to Brad Pauly, a real estate broker at Pauly Presley Realty, the appeal of homeownership soared as individuals looked to transition from apartments to homes with yards. The city saw staggering numbers of offers on properties, with bidding wars often driving prices well above asking.

The Decline in Austin Home Prices

The latest data from Realtor.com reveals a decline in housing prices across the Austin metropolitan area, with the median list price dropping by 6.1% over the past two years, reaching $542,000 in February. Monthly rents also saw a decrease of 4.4% year over year, settling at a median of $1,530.

Different neighborhoods experienced varying degrees of price adjustments, with areas like the west side and suburban outskirts witnessing significant declines. For instance, the 78748 ZIP code saw median list prices decrease by 20.4% from the peak in the second quarter of 2022 to February 2024.

Future Outlook

Despite the recent price drops, experts remain optimistic about the Austin housing market. While prices have fallen from their peak, they still reflect a notable increase compared to pre-pandemic levels. Well-priced homes in good condition continue to attract multiple offers, indicating ongoing demand in certain segments of the market.

Looking ahead, the expectation is that a decrease in mortgage rates could stimulate further home sales. However, Stephanie Douglass suggests that prices are unlikely to decline significantly beyond their current levels. Instead, the market appears to be returning to a more sustainable state, where homes are once again within reach for the average salaried employee.

Understanding the Shift in Austin’s Housing Market: Affected Neighborhoods:

The recent adjustments in Austin’s housing market have not only impacted individual homeowners but also investors seeking opportunities in the real estate sector. To gauge the extent of price fluctuations, we delved into Realtor.com’s data on median home list prices across various ZIP codes in Austin, encompassing both the city and its surrounding suburbs.

Comparing Price Per Square Foot

By analyzing the price per square foot, we can effectively compare homes of similar sizes and gain insights into how different neighborhoods have fared over time. This method allows for a more accurate assessment of price trends, especially in areas where larger luxury homes coexist with more modest dwellings.

Notable Declines in Price

Here are some of the ZIP codes that have witnessed significant decreases in price per square foot:

1. 78733 ZIP code – Barton Creek

– Median list price: $1.75 million
– Maximum median list price per square foot in Q2 2022: $717
– Median list price per square foot in February 2024: $518
– Percentage change in price per square foot: -27.7%

Located in northwestern Austin, the Barton Creek neighborhood is renowned for its spacious luxury homes, often featuring expansive yards and swimming pools. During the pandemic, this area attracted affluent buyers from coastal regions, drawn by the allure of the Colorado River.

2. 78612 ZIP code – Bastrop

– Median list price in February 2024: $572,245
– Maximum median list price per square foot in Q2 2022: $308
– Median list price per square foot in February 2024: $230
– Percentage change in price per square foot: -25.4%

Situated approximately 40 minutes southeast of downtown Austin, Bastrop emerged as a sought-after destination during the pandemic. Builders responded to heightened demand by constructing numerous homes across various price points. However, increased supply, coupled with rising mortgage rates, likely contributed to the decline in prices.

3. 78754 ZIP code – Windsor Hills

– Median list price: $408,500
– Maximum median list price per square foot in Q2 2022: $272
– Median list price per square foot in February 2024: $205
– Percentage change in price per square foot: -24.5%

Windsor Hills, located in the northeastern part of Austin, appeals to buyers with its affordable housing options. Close proximity to downtown, combined with lower property prices, attracted many first-time homebuyers to this area. The presence of active builders further contributed to the availability of housing stock.

4. 78652 ZIP code – Manchaca

– Median list price: $596,250
– Maximum median list price per square foot in Q2 2022: $376
– Median list price per square foot in February 2024: $288
– Percentage change in price per square foot: -23.3%

Manchaca, a suburb southwest of downtown Austin, offers affordability and amenities such as parks and lower property taxes. The allure of new construction projects has drawn buyers to this area, resulting in a dynamic real estate market.

5. 78704 ZIP code – Travis Heights, Bouldin Creek

– Median list price: $997,000
– Maximum median list price per square foot in Q2 2022: $796
– Median list price per square foot in February 2024: $618
– Percentage change in price per square foot: -22.3%

Travis Heights and Bouldin Creek, located in the vibrant heart of Austin, experienced a surge in demand during the pandemic. However, as mortgage rates rose, the market cooled down, leading to a decline in prices.

In summary, these neighborhoods offer insights into the evolving dynamics of Austin’s housing market. While prices have retreated from their peak levels, these areas remain attractive to buyers seeking a balance between affordability and amenities. As the market continues to adjust, opportunities abound for investors and homeowners alike to make informed decisions.

While the recent decline in Austin’s housing prices may seem like cause for concern, it is viewed by experts as a natural correction rather than a crash. As the market stabilizes, opportunities for buyers to enter the market and find affordable homes are expected to increase, particularly in neighborhoods that have experienced more significant price adjustments.