Austin Real Estate Market: Prices, Trends & Forecasts 2022

The Austin real estate market has become one of the most active real estate markets in all of Texas, if not the entire country. With a burgeoning technology industry, relatively low housing prices, and plenty of demand, real estate in Austin has become a bit of a commodity. The culmination of several indicators has made local real estate more desirable than ever before.

It should be noted, however, that the presence of COVID-19 has impacted several major market indicators. In particular, home prices have increased more in Austin than just about anywhere else in the country. The latest round of appreciation is largely due to a unique convergence between demand, low borrowing costs, increased savings, and an inherent lack of supply. These factors have made real estate in Austin very attractive, and investors who know what to do with it will find the real estate in Austin to be a timely investment.

The Texas city still has plenty of potential, which begs the question: Is Austin a good place for real estate investment prospects? The simple answer is yes. Now may be a great time to invest locally, as the Coronavirus appears to have created a window of opportunity for long-term investors.

Austin Real Estate Market 2022 Overview

  • Median Home Value: $625,905

  • Median List Price: $532,367 (+25.0% year over year)

  • 1-Year Appreciation Rate: 40.4%

  • Median Home Value (1-Year Forecast): 21.9%

  • Weeks Of Supply: 7.2 (+0.6 year over year)

  • New Listings: 503.5 (-12.1% year over year)

  • Active Listings: 3,507 (-12.6% year over year)

  • Homes Sold: 575.3 (-11.2% year over year)

  • Median Days On Market: 32.5 (-2.7 year over year)

  • Median Rent: $1,801 (+21.1% year over year)

  • Price-To-Rent Ratio: 28.96

  • Unemployment Rate: 3.8% (latest estimate by the Bureau Of Labor Statistics)

  • Population (Metro): 978,908 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $71,576 (latest estimate by the U.S. Census Bureau)


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Austin housing market trends

Austin Housing Market Trends 2022

Today’s Austin housing market trends are primarily the result of the pandemic. More specifically, COVID-19 brought about several indicators that have completely altered the real estate landscape for the better part of two years.

Most notably, local real estate has become prohibitively expensive. Few markets across the entire country have seen homes appreciate at a faster rate than in Austin. Homes in Travis County, in particular, experienced the third-largest year-over-year gains in median prices at the end of last year.

Price increases are largely the result of higher demand, lower interest rates, more average savings in bank accounts, and a distinct lack of inventory. The unique culmination of these factors inherently drove up competition at a time when homeowners weren’t willing to put their houses on the market. As a result, sellers have increased prices accordingly, to the tune of more than forty percent over the last 12 months.

The one-sided seller’s market drove many prospective buyers to the rental market, where prices have also increased similarly (but not nearly as much as their home value counterparts). The departure of buyers from the housing market to the rental market increased demand for rentals, and should continue to do so for the foreseeable future. Therefore, opportunistic Austin real estate investors should emphasize long-term rental property acquisitions. The latest increase in demand and rent should offset higher acquisition costs and enable years of positive cash flow.

Travis County Housing Market Trends

Travis County is the fifth-most populous county in Texas, and has served as the epicenter for many of this years Austin housing market trends. In addition to being associated with one of the hottest markets in the country, however, Travis County is now the beneficiary of Tesla’s latest Gigafactory. With Tesla moving to the south of Austin, the area is already expecting a surge in employment and household income.

The opening of the new Gigafactory has already impacted local real estate prices. In fact, Travis County is one of the hottest markets in the country, according to ATTOM Data Solutions.

“Among the 43 counties with a population of at least 1 million, the biggest year-over-year gains in median prices during the third quarter of 2021 are in Middlesex County (outside Boston), MA (up 32 percent); Maricopa County (Phoenix), AZ (up 24 percent); Travis County (Austin), TX (up 23 percent); Hillsborough County (Tampa), FL (up 22 percent) and Clark County (Las Vegas), NV (up 22 percent),” said ATTOM Data Solutions’ third-quarter 2021 U.S. Home Affordability Report.

Real estate in Travis County is more expensive than ever, and there’s nothing to suggest the trend won’t continue. Austin was already becoming an influential tech hub. The addition of Tesla will only draw more high net-worth individuals to the area and increase home values.

Austin Housing Market Trends By County

Austin housing market trends have translated seamlessly to just about all of the city’s adjacent counties. Austin’s incredible momentum can be seen just about everywhere, and the following counties are no exception:

  • Williamson County: Representing the northern boundary of the Austin housing market, Williamson County has seen median sales prices increase 32.6% year over year. Today, the average home in Williamson County sells for $430,000 and lasts about 33 days on the market (that’s down 15.4% from last year).

  • Hays County: At the Southwestern tip of Austin, Hays County has benefited from the announcement of Tesla’s latest Gigafactory. Median sales prices are up 30.0% year over year, and now rest somewhere in the neighborhood of $400,000. Despite the increase, homes are selling 42.5% faster than the previous year.

  • Bastrop County: Also located within close proximity to the new Tesla factory, Bastrop has seen a lot of added attention the last year. At $375,000, the county’s median sales price is now up 33.0% from this time last year. However, as home prices increase, the median days on market have dropped 32.7% to 34 days.

  • Caldwell County: Situated between Austin and San Antonio, Caldwell County has benefited from being within close proximity to two fast growing cities. Caldwell’s location has increased home prices 21.2% in as little as one year’s time. More impactful, however, is the 83.6% drop in how long homes stay on the market. Homes are selling faster than ever, lasting a mere 11 days on the market.

Austin Foreclosure Statistics 2022

According to a recent ATTOM Data Solutions U.S. Foreclosure Market Report, “lenders started the foreclosure process on 25,209 U.S. properties in Q3 2021, up 32 percent from the previous quarter and up 67 percent from a year ago — the first double digit quarterly percent increase since 2014.”

The latest increase shouldn’t come as a surprise, as government aid in the wake of the pandemic has started to wane.

“The foreclosure moratorium on government-backed loans has virtually stopped foreclosure activity over the past year,” said Rick Sharga, executive vice president of RealtyTrac, an ATTOM Data Solutions company. “But mortgage servicers have been able to begin foreclosure actions on vacant and abandoned properties, which benefits neighborhoods and communities. So it’s likely that these foreclosures are causing the slight uptick we’ve seen over the past few months.”

Foreclosures are up across the country, and Austin foreclosure statistics are most likely not going to be an exception. That said, it’s too soon to tell exactly how many foreclosure filings will take place in Austin. However, Austin foreclosures will increase; it’s not a matter of if, but rather when. The expiration of government assistance will all but guarantee an increase in delinquencies. As a result, real estate investors in Austin need to start lining up financing now. Doing so will simultaneously enable them to help distressed homeowners and secure deals.

Austin Median Home Prices 2022

Not unlike most markets across the country, Austin real estate bottomed out around the first quarter of 2012. At the time (January 2012), the median home value reached as low as $225,000. It was also at that time that local real estate would start to appreciate at a historic pace. Due largely to a strengthening economy, increasing optimism, and a lack of available inventory, home prices have increased for the better part of a decade. In the time real estate bottomed out to today, the city’s median home value has appreciated 178.1%. After nine consecutive years of appreciation, the median home value in Austin is now $625,905.

Here’s a list of the neighborhoods that have contributed the most to Austin’s appreciation rates over the last 20 years:

  • Huston-Tillotson U / E 11Th St

  • Govalle Ave / Webberville Rd

  • Nile St / N Pleasant Valley Rd

  • Pershing

  • S Pleasant Valley Rd / S Lakeshore Blvd

  • E Riverside Dr / Montopolis Dr

  • E Cesar Chavez St / 1st St E

  • E Martin Luther King Jr Blvd / Poquito St

  • E 12Th St / Chicon St

  • Rogge Ln / Wellington Dr

Whether or not these are the best neighborhoods in Austin to invest in remains to be seen, but there is no denying the progress they have made in a relatively short period.

It is worth noting that price forecasts have been adjusted due to the recent Coronavirus outbreak. In the last year alone, the median home value in Austin has increased 41.6%.

Moving forward, a lack of inventory will continue driving prices up. With a mere 7.2 weeks of supply, there aren’t enough listings to meet demand, enabling homeowners to increase prices accordingly. In the next 12 months, supply and demand constraints could increase prices by as much as 21.9%.

Austin Real Estate Market Forecast 2022

Austin real estate trends have outpaced the national industry. However, in light of the Coronavirus, markets across the country may start to act independently. While it is too early to tell exactly what real estate in Austin will look like for the foreseeable future, it is possible to interpret the pandemic’s impact in a meaningful way. Here is a look at the Austin real estate market forecasts which are most likely to come to fruition:

  • Buying a house in Austin will get more expensive: The median house price in Austin has increased exponentially over the last year. The increase was directly correlated to more competition, less inventory, lower interest rates and bigger savings accounts. That said, there’s nothing to suggest the same indicators won’t drive prices higher over the next 12 months. Inventory isn’t expected to ease anytime soon and more people will want to buy before interest rates jump, which could lead to additional increases. Finally, the opening of Tesla’s new factory will draw more interest to the local market, driving prices up at a faster-than-average pace.

  • Austin foreclosures will increase: Austin foreclosures are historically low, but the expiration of government assistance programs is expected to increase filings. It’s too soon to tell how many foreclosures to expect, but the chances of an increase are more likely than not.

  • Rental properties will be the most viable investment strategy: Home price appreciation has detracted from profit margins, effectively making rehabs less attractive to investors. However, the same indicators that lowered profit margins on flips made rental properties more attractive. In particular, rents have increased 21.1% in the last year. Home values have increased much more, which means there’s more room for rents to run up.

Impact Of COVID-19 On The Austin Real Estate Market

The Coronavirus has impacted the whole of the Austin real estate investing community. In a matter of a few months, the pandemic shifted fundamentals in favor of long-term investors. While years of appreciation were already starting to eat into profit margins for rehabbers, historically low interest rates and demand for rental units have made the prospect of becoming a landlord more attractive. However, it is worth noting that the impact of COVID-19 on the Austin real estate market extends beyond local investors.

Outside of the Austin real estate investing community, traditional buyers and sellers have been given several reasons to participate in the market actively. Buyers have entered the market in droves in an attempt to take advantage of today’s low interest rates. Today’s interest rates are the direct result of the Coronavirus, as the Fed has promised to keep them low to spark activity within the national housing sector. At approximately 3.07%, it’s historically cheap to take advantage of institutional capital. Essentially, ready and willing buyers don’t want to leave money on the table.

If that wasn’t enough, demand resulting from the attractive interest rates is likely to increase prices for the foreseeable future. Not unlike today’s interest rates, the threat of appreciation has forced many people to act as fast as possible. People want to purchase before prices rise higher than they already are, which brings us to my next point: homeowners.

The market left in the wake of the Coronavirus is unequivocally a seller’s market. The only reason buyers are so active, in fact, is because they want to purchase before the market leans even more heavily in favor of sellers. Today, sellers have many things working in their favor, not the least of which include supply, demand, and pricing. If for nothing else, plenty of people are looking to buy, but there isn’t enough inventory to meet demand. Inventory levels were low before the pandemic, and builders haven’t been able to add as much to supply as they would have liked to. Shutdowns and quarantines prevented many builders from working for months, which didn’t help detract from the shortage of available homes. As a result, supply is still constricted, allowing homeowners to demand a premium.

Austin Real Estate Investments 2022: Should You Invest?

With median home values up approximately 40.4% in the last year, and expected to continue rising, real estate in Austin is still attractive. The Austin real estate investing community is the beneficiary of increasing demand from first-time buyers. Due to the city’s growing technology industry and increasing job opportunities, millennials have made the city a priority for their home buying efforts. Consequently, it is doing its best to attract new homeowners, which begs the question: Is Austin a good place for real estate investment?

More buyers have increased competition and prices to a point where gross flipping profit margins are starting to grow slim. In fact, supply and demand have shifted the most viable exit strategy for investors to use. While rehabbing and flipping have served investors well over the course of the recovery, it appears today’s market leans more heavily in favor of long-term investors. That’s not to say there aren’t profits to be made flipping houses in Austin (there absolutely are), but rather that today’s economic indicators are more suited for rental property owners.

Real estate still has room for flippers to prosper. However, nearly a decade’s worth of appreciation has made long-term strategies more attractive. Building a rental property portfolio is more attractive now than ever before, and the presence of the Coronavirus could actually work to investors’ benefit.

Here are just a few reasons investors should look into building their own rental portfolio due to the Coronavirus:

  • Interest rates on traditional loans are historically low

  • Years of cash flow can easily justify today’s higher acquisition costs

  • The price-to-rent ratio suggests it’s better to rent than buy

The Coronavirus has made sure interest rates will remain low for the foreseeable future. In an attempt to buoy the economy, the Federal Reserve has announced interest rates will remain low for at least the next couple of years. The lower borrowing costs are helping to offset today’s higher prices. As a result, local investors are finding it easier to justify today’s higher acquisition costs. Additionally, lower borrowing costs simultaneously reduce monthly mortgage obligations and increase cash flow from properties placed in operation.

With a price-to-rent ratio around 28.96, fundamentals lean heavily in favor of renting. More specifically, it is currently more affordable to rent than to buy. Years of appreciation have driven up prices so much that renting is actually considered the cheaper alternative. As a result, rental property owners should see increased demand for their units. The demand should allow the same landlords to increase prices. More importantly, it doesn’t look like rental demand will drop anytime soon. With too few listings, even people who want to buy will be forced to continue renting because they can’t find a home. The lack of available housing will ultimately drive more people to rent.

Is Austin a good place to buy a rental property? Austin’s real estate market is landlord-friendly. Again, the local market is currently a hotbed for investor activity. Any of today’s most popular exit strategies are in play. However, rapidly increasing home prices, low interest rates, high rental demand, and years of potential appreciation should place buying rental property at the top of every investor’s list.

If that wasn’t enough to get the Austin real estate investing community excited, here are some other factors to consider:

  • Austin’s Housing Market Bubble

  • How Tech Companies Affect The Austin Real Estate Market

Austin’s Housing Market Bubble

It is important to note that the Austin housing market is not in a bubble. While prices are up considerably over the last 10 years, many of the underlying indicators that led to the last bubble are nowhere to be found. For starters, local banks have dramatically improved underwriting procedures. As a result, today’s buyers are more qualified than in years past. That said, real estate in Austin is already starting to temper. Some of the most desirable neighborhoods are already starting to see price drops. The market is cyclical and it looks as if it’s starting to correct itself.

How Tech Companies Affect The Austin Real Estate Market

The Austin housing market has been considered a burgeoning tech hub for years. Friendly tax laws and a relatively low cost of living have attracted some of the country’s biggest names in the tech industry. The latest, however, may be the best thing to happen to the Austin housing market in years. The impending opening of the Tesla Gigafactory is simultaneously creating employment opportunities, attracting high net-worth individuals, and increasing demand for housing. As a result, Austin has done its best to increase building permits and ease supply and demand pressure.

Austin Real Estate Market: Where Should You Invest?

Austin housing market trends have made it hard for investors to go wrong for the better part of a decade. However, real estate investors’ recent success in Austin has forced aspiring investors to look for opportunities elsewhere. While just about every neighborhood in Austin looks to cater to investors at the moment, the following look particularly attractive:

  • Barton Creek

  • Crestview

  • Northwest Hills

Barton Creek Housing Market Trends

Barton Creek housing market trends can be broken down as follows:

  • Sale Price: $1,758,500 (-11.1% year over year)

  • Sale $/Sq. Ft.: $562 (+27.7% year over year)

  • Total Homes Sold: 3

  • Over List Price: 2.0%

  • Down Payment: N/A

  • Days On Market: 31

Crestview Housing Market Trends

Crestview housing market trends can be broken down as follows:

  • Sale Price: $738,625 (+3.8% year over year)

  • Sale $/Sq. Ft.: $491 (+26.9% year over year)

  • Total Homes Sold: 12

  • Over List Price:2.0%

  • Down Payment: N/A

  • Days On Market: 38

Northwest Hills Housing Market Trends

Northwest Hills housing market trends can be broken down as follows:

  • Sale Price: $350,000 (-39.1% year over year)

  • Sale $/Sq. Ft.: $355 (+35.0% year over year)

  • Total Homes Sold: 41

  • Over List Price: 7.0%

  • Down Payment: N/A

  • Days On Market: 41

Summary

Not unlike most markets across the country, Austin has seen its lack of available inventory drive up prices in a relatively short period of time. However, real estate in Austin remains in high demand. Thanks, in large part, to a thriving economy and booming tech industry, demand doesn’t appear as if it will taper off anytime soon. As a result, Austin real estate investors can expect the city to weather the current Coronavirus storm and come out on the other end stronger.

Have you thought about investing in the Austin housing market? If so, what are you waiting for? We would love to know your thoughts on real estate in the comments below:


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Sources

https://www.zillow.com/austin-tx/home-values/
https://www.zillow.com/research/data/
http://www.freddiemac.com/pmms/pmms30.html
https://theenergylogic.com/housing-tides/housing-tides-interface/
https://www.neighborhoodscout.com/tx/austin/real-estate
https://www.bls.gov/regions/southwest/summary/blssummary_austin.pdf
https://www.census.gov/quickfacts/fact/table/austincitytexas/LND110210
https://www.redfin.com/news/data-center/
https://www.redfin.com/county/2885/TX/Williamson-County/housing-market
https://www.redfin.com/county/2744/TX/Hays-County/housing-market
https://www.redfin.com/city/21448/TX/Barton-Creek/housing-market
https://www.redfin.com/neighborhood/548413/TX/Austin/Northwest-Hills/housing-market
https://www.redfin.com/neighborhood/172201/TX/Austin/Crestview/housing-market
https://www.redfin.com/county/2650/TX/Bastrop-County/housing-market
https://www.redfin.com/county/2667/TX/Caldwell-County/housing-market
https://www.attomdata.com/news/market-trends/foreclosures/attom-mid-year-2021-u-s-foreclosure-market-report/
https://www.attomdata.com/news/market-trends/home-sales-prices/attom-q3-2021-u-s-home-affordability-report/
https://www.attomdata.com/news/market-trends/foreclosures/attom-september-and-q3-2021-u-s-foreclosure-market-report/

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.