Austin’s Housing Craze Is Starting to Cool Down

Home prices in the Lone Star State’s capital have dropped 12% since 2022 — the largest decline of any US city.

Photo of the outside of a brown house
Photo by Irene Rego via Unsplash

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Everything’s bigger in Texas — even housing bubbles.

Once the poster child for pandemic-era migration, home prices and apartment rents in Austin, Texas, are now falling faster than anywhere else in the US, according to a Wall Street Journal analysis published Monday.

Keep Austin Relatively Affordable

Austin’s housing market truly exploded. Between the start of 2020 and the spring of 2022, home prices leaped by 60% as startups and massive tech companies alike flocked to the quirky Texas capital, dramatically raising the city’s per capita income in the process. Investors rushed in, too, dropping nearly $10 billion to snap up apartment space in 2021, according to MSCI Real Assets.

But there’s also been a building boom, and a major slowdown in population growth — two key ingredients for bursting the housing bubble:

  • Home prices have fallen 11% since a peak in 2022, according to the Freddie Mac House Price Index. That’s a bigger dropoff than any other US city.
  • Rents have similarly fallen around 7% in the past 12 months, also more than any other city, according to data estimates from listings website Apartment List. Some landlords, according to the WSJ, are offering weeks of free rent. 

Ashes to Ashes: Just as Austin proved a bellwether for Covid-era migration trends that sent home prices in many Sun Belt cities soaring, it could prove to be a trendsetter in the other direction as well. Fellow pandemic boomtowns Phoenix and Nashville have also seen prices begin to dip. Meanwhile, homebuilder sentiment on the National Association of Home Builders/Wells Fargo Housing Market Index hit its rosiest level on Monday since July, signaling that demand for new homes may be starting to return. Now, if only Jerome Powell could finally lower those interest rates…