Austin, Texas's Red-Hot Housing Market is Cooling

New York, NY, March 18, 2024-"The Sunbelt city that came to symbolize the pandemic housing boom is now leading a national property cool-down,” reports the Wall Street Journal.

“Home prices and apartment rents in Austin, Texas, have fallen more than anywhere else in the country, after a period of overbuilding and a slowdown in job and population growth. 

“That marks a sharp reversal from previous years when Austin’s real-estate market was sizzling. The city attracted waves of remote workers on six-figure tech salaries. Others arrived after companies such as Tesla and Oracle moved offices there, taking advantage of lower taxes and less business regulation. Austin’s economy grew at nearly double the national rate, and it became the country’s tenth-largest city. 

“Now, it is contending with a glut of luxury apartment buildings. Landlords are offering weeks of free rent and other concessions to fill empty units. More single-family homes are selling at a loss. Empty office space is also piling up downtown, and hundreds of Google employees who were meant to occupy an entire 35-story office tower built almost two years ago still have no move-in date.

“Austin’s recent downswing is a sign that migration patterns that were turbocharged by the pandemic continue to fade. Housing markets in other Sunbelt cities, including Phoenix and Nashville, Tenn., that swelled with new residents in recent years, have also softened from overbuilding, slowing population growth and a lack of affordability.

“Austin was at the forefront of the U.S. housing boom, when rock-bottom borrowing costs near the start of the pandemic fueled robust sales and sent home prices to new highs. Austin prices soared more than 60% from 2020 to the spring of 2022.

“A surge in interest rates crushed the housing market nationwide, and existing-home sales fell to a nearly 30-year low in 2023. Despite that collapse, home prices remain near record levels thanks to tight supply. But in Austin, according to the Freddie Mac House Price Index, prices have fallen more than 11% since peaking in 2022, the biggest drop of any metro area in the country.”