Austin Housing Market Rocked as New Home Prices Slashed Up to 30%

A person watches the sunrise over the downtown skyline on March 19, 2024 in Austin, Texas. From peaking in 2022, home prices and apartment rents in Austin, Texas, have declined more than any other city in the country in 2024.

The former pandemic boomtown of Austin, Texas, is still seeing sellers slashing the asking price on their homes by as much as 30 percent, with the city yet to fully recover from the aggressive blow it was dealt in recent years.

A newly built, three-bedroom, three-bathroom single-family home in New York Avenue, Austin, was listed for sale on Zillow on Monday, June 24, for $899,000—over $400,000 less than it was sold for in August 2023. The house, which has a total interior livable area of 1,494 square feet, was built last year.

The listing's description said that the property has been "priced to sell," adding that there are "new projects in the pipeline" and "investors say 'sell it'." According to the sellers, the property is the "best value in East Austin for this price."

The staggering price cut on the New York Avenue property shows that the frenzied days of homebuying in Austin are definitely over, and sellers now have to meet reluctant buyers halfway. The Austin housing market was one of the hottest in the nation during the pandemic years, with growing demand leading to skyrocketing prices.

Between 2020 and 2022, the Texas city was considered a sellers' market, with buyers fighting over a limited supply of properties and engaging in bidding wars that usually ended with one party offering a sum often way above asking price.

In May 2022, the median list price of a home in Austin reached a peak of $539,900. According to Moody's Analytics, homes in the Texas city were overvalued by 63.7 percent in the first quarter of 2022.

But the situation has changed drastically since then, driven by a drop in the number of remote workers flocking into the city from other states. Accordingly, sellers have had to adapt.

Following the so-called "correction" of the U.S. housing market between late summer 2022 and spring 2023, Austin saw the steepest home price drops in the country. Between July 2022 and April 2023, home prices in the city fell by 10.2 percent, according to the Zillow Home Value Index, while the national decline was only 1 percent during the same time frame.

Redfin chief economist Daryl Fairweather previously told Newsweek that "because prices have been so high, there was a lot of room for prices to fall" as mortgage rates surged and migration to the city declined. The addition of newly built homes has also contributed to cooling the Austin market down, as Texas currently tops the list of states that have started and completed the most construction projects in recent years (alongside Florida).

A single-family home on 403 Middle Lane, Austin, listed for sale on Zillow has seen price cuts of around 23 percent since it was first put on the market in March. Over three months ago, the property—a three-bedroom, two-bathroom property with a total interior livable area of 1,480 square feet—was listed for $349,900; on Wednesday, the price was cut to $269,900. It was the fourth price cut since March, and the property remains unsold.

An apartment on 1840 Burton Dr, Austin, listed for sale on Zillow has seen seven price cuts since it was put on the market on April 19 for $199,000. The property near downtown Austin is now selling for $159,900—about 20 percent less. The apartment has one bedroom, one bathroom and a total interior livable area of 518 square feet.

According to the latest data on Zillow, the average Austin home value was $548,654 by the end of May, down 4.1 percent compared to a year earlier.

But home prices are clawing back, especially as some neighborhoods remain more attractive than others. Redfin reported that the median sale price of a home in Austin has been climbing back and was $587,250 in May, up 3.9 percent year-over-year. According to the real estate brokerage, the median sale price in the city has been growing steadily since March.

Start your unlimited Newsweek trial