Through all of 2021 and into 2022, the Austin real estate market was one of the hottest housing markets in the country. This was largely due to an influx of buyers from other parts of the country, part of a nationwide pandemic-fueled home buying surge.
Many are now wondering what’s in store for the Austin housing market in 2023. What’s the long-range forecast for this red-hot real estate scene?
While no one can predict future economic or housing trends with complete accuracy, we can make an educated guess based on current conditions. With that in mind, here is our 2023 housing market forecast for the Austin, Texas metro area.
Austin, Texas Housing Market Forecast Into 2023
There will almost certainly be more inventory available for home buyers through the second half of 2022 and into 2023. Additionally, we expect to see slower home-price growth within the Austin area real estate markets in 2023, compared to the previous two years. Last but not least, home buyers will probably experience a less “frenzied” pace — and less competition overall.
Let’s now take a deeper dive into these predictions for the Austin real estate market in 2023.
1. More inventory for home buyers
In June of 2022, Realtor.com published a housing market update with information for the nation’s largest 50 metropolitan areas. According to that report, the Austin-Round Rock metro area led the nation in terms of housing market inventory growth.
Total active inventory (i.e., property listings) rose by nearly 86% from May 2021 to May 2022. That was the largest year-over-year increase in inventory among the nation’s 50 largest metropolitan areas. In fact, no other metro even came close to the inventory growth seen within the Austin housing market.
To quote the June 2022 report:
On average in the 50 largest U.S. markets, active inventory grew by double-digits (+14.9%) over May 2021 levels, with the biggest increases in the West (+33.6%) and South (+18.3%), led by Austin, Texas (+85.8%), Phoenix (+67.1%) and Sacramento, Calif. (+54.6%). Active listings declined on a year-over-year basis in just 8 markets.
Which brings us to our first forecast and prediction for the Austin real estate market in 2023. Home buyers who make a purchase next year will almost certainly have more properties to choose from, when compared to those who bought a home in 2021 or early 2022.
This could bring a bit more balance into the Austin housing market, while making the house-hunting process less frustrating for home buyers.
2. Additional (but slower) home-price growth
It’s fairly easy to predict that the Austin real estate market will see rising home prices for the foreseeable future. Record-low inventory levels and strong demand among buyers will continue to put upward pressure on home prices.
But many housing analysts have made predictions that prices will slow down in the coming months.
And that brings us to our second prediction for the Austin, Texas housing market in 2023. Home prices should continue to climb well into next year, but probably at a slower pace than in previous years.
According to Zillow, the median home value for the Austin-Round Rock metropolitan area rose by around 37% from May 2021 to May 2022. That was one of the biggest year-over-year price increases of any metro area in the country.
When this article was published, in June 2022, the median value for the Austin-Round Rock real estate market had nearly reached the $600,000 threshold. The median house price in the area more than doubled from 2016 to 2022.
But the pace of home-price appreciation will likely slow down through the second half of 2022 and into 2023. In fact, we’re starting to see some signs of this trend already.
According to the June 2022 Realtor.com report mentioned earlier, 18.3% of property listings within the Austin metro area had a price reduction. That was a significant increase compared to a year earlier.
Inventory growth has something to do with this. Austin-area sellers are seeing more homes come onto the market, so they are more inclined to reduce their prices to attract buyers. This trend will likely continue into 2023, making it one of our key predictions for the Austin real estate market.
3. A less frenzied pace compared to 2021 and 2022
Soaring home prices have reduced the number of qualified buyers within the Austin metro area. Additionally, today’s higher prices will reduce the number of people who move into the area from out-of-state, seeking affordable homes.
On top of this, home buyers have to contend with higher gas prices, inflation, and higher mortgage rates. All of these cost-related trends should have a cooling effect on the Austin real estate market later this year and in 2023.
Which brings us to our third and final prediction for the Austin, Texas housing market. In 2023, home buyers in the area will likely enjoy a less frenzied and frantic pace within the housing market. There will probably be fewer buyers to contend with, along with a significant reduction in bidding worse and multiple-offer scenarios.
Here’s the bottom line to all of this:
The Austin real estate scene will likely remain a seller’s market for many months to come, and possibly throughout 2023 as well. But it’s beginning to shift in a more buyer-friendly direction, particularly where inventory is concerned.
Home buyers who purchase a home in the Austin area in 2023 will probably encounter higher housing costs. But they could have more properties to choose from as well, along with a more “relaxed” house-hunting experience.
Disclaimer: This article includes predictions and forecasts for the Austin metro area real estate market extending into 2023. These forward-looking views are the equivalent of an educated guess and should be treated as such. MetroDepth makes no claims or assertions regarding future economic trends.