A full four years have passed since Austin's homebuying boom reached its zenith, and now the city is dealing with a harsh market correction. Many Austin homeowners who bought at the peak are now discovering how painful that timing can be.
Austin's rise was fast and dramatic. During the pandemic, many remote employees left expensive coastal areas and moved to Austin, attracted by its affordability and favorable tax climate. Census figures show the region's population grew by over 5% from 2020 to 2022, the fastest rate among major U.S. cities.
By August 2021, asking prices had soared 36% year over year, according to Realtor.com figures. By spring 2022, typical homes topped $465,000.
Ryan McPherson bought a four-bedroom house in East Austin in 2022, offering $20,000 above the list price and paying $615,000. He now expects to sell it for about $420,000, a decline of roughly 30%. "Everybody that I worked with, they kept saying Austin only goes up," McPherson told Business Insider in an interview.
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That confidence didn't last. He has returned to Phoenix and no longer plans to hold out for a recovery. "I'm not going to keep trying to wait this out and pray that there's a turnaround, because it's not coming right now," he said. "I'd rather just stop losing sleep over it."
He's far from alone.
The same forces that powered the boom eventually worked against it. Low mortgage rates and remote-work flexibility had pulled a wave of new residents into the region; when the Federal Reserve reversed course and rates climbed, the influx slowed while all the homes built for that wave were still coming online. Austin was left with far more supply than demand, and prices have been adjusting downward ever since.
According to census estimates, developers added over 211,000 units to Austin's housing stock between 2020 and 2025, an increase of more than 20%. However, when the Federal Reserve began raising interest rates in March of that year, potential buyers disappeared exactly as a wave of newly built homes hit the market.
Austin agent Lindsay Neuren said: "Everything was going into multiple offers, and then it really just stopped. That really spooked the market."
The numbers tell the story. A Realtor.com analysis shows that among major U.S. metros, Austin has experienced the largest home price decline over the last four years, with asking prices falling nearly 25% from their 2022 high. About 79% of properties purchased in 2022 have since fallen in value below what their buyers paid.
According to Joel Berner, a senior economist at Realtor.com, "Ironically, affordability was the big draw." He went on to say, "Prices were getting totally out of control."
The correction has also reshaped the local housing landscape. With so many units still under construction and mortgage rates remaining elevated, the market is likely to stay sluggish for the foreseeable future. Homeowners who bought in 2022 face a long wait before their properties regain value, and some have already made the decision to cut their losses and move on, as McPherson did.
The combination of aggressive construction and skyrocketing mortgage rates created a glut of inventory that quickly overwhelmed what remained of buyer demand. Sellers who timed the market poorly have had to slash prices repeatedly, and some are walking away with substantial losses. While other cities have seen cooling, Austin's correction stands out because it boomed so intensely and has now fallen so far.
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