In this article: five real estate market predictions for the Austin, Texas metro area in 2024, based on current market conditions. (See disclaimer.)
The Austin-area housing market has been on a roller coaster for the past few years.
It was fairly competitive going into the COVID pandemic, with many new residents relocating in from other parts of the country. The pandemic simply shifted everything into overdrive, causing a migratory shift that flooded the Austin area with new home buyers.
During the second half of 2020, and all throughout 2021, the Austin, Texas housing market experienced an inventory shortage, a buying frenzy, and unprecedented home-price growth. It quickly became one of the hottest real estate scenes in the country, marked by extremes in terms of price growth and home sales.
But that was then, and this is now.
As of spring 2023, the Austin-area housing market has downshifted dramatically. And the latest real estate predictions suggest that this trend could continue through much of 2023, and possibly into 2024. (More on that forecast in just a moment.)
The Austin-Round Rock-Georgetown metropolitan real estate scene is currently shifting in a way that favors home buyers rather than sellers — something we haven’t seen for years. Today, buyers have more negotiating leverage and sellers have to work harder to attract offers.
Austin, Texas Real Estate Market Predictions for 2024
That brings us up to the present. But what about the future?
What’s the long-range forecast for the Austin real estate market, extending into 2024? What kinds of housing predictions can we make, based on all of the developments mentioned above?
Here are five reasonable predictions for the Austin, Texas metro area housing market, for the rest of 2023 and into 2024:
1. There will be more homes available for buyers.
The number of homes for sale across the Austin area has increased significantly over the past year or so. In fact, this Central Texas region currently leads the nation in terms of year-over-year inventory growth, with no other metro area coming close.
In May 2023, Realtor.com published a housing market report with data for the nation’s 50 largest metropolitan areas. According to that report, the Austin-Round Rock-Georgetown metro experienced the biggest increase in inventory.
The total number of active real estate listings across the Austin-area real estate market increased by a whopping 258% from April 2022 to April 2023. That was the biggest year-over-year increase of all 50 metropolitan areas included within this report.
Only the Nashville, Tennessee and Raleigh, North Carolina metros came close to matching it, with 193% and 183% inventory growth, respectively.
The Austin, Texas real estate market stood out in other ways, as well. According to Realtor.com’s data, it’s the only metro area in the country that currently has more housing market inventory than pre-pandemic levels.
To quote their May 2023 report:
“In April, only Austin saw higher levels of inventory (+4.3%) in April compared to typical 2017–2019 levels, while in Las Vegas, where active inventories were above pre-pandemic level in March, inventories were 8.1% below typical 2017-2019 levels in April.”
Granted, supply levels have dipped a bit since the start of 2023, partly due to higher mortgage rates. But even so, we expect to see more homes available for purchase in 2024, as the market continues to normalize.
So that’s our first forecast and prediction for the Austin-area real estate market in 2024. Home buyers will likely have more properties to choose from next year, due to the gains that are occurring in 2023.
2. Prices will start rising again, but at a more modest pace.
Currently, home prices are dropping steadily across the Austin metro area. And here again, the Central Texas city stands out from other U.S. metropolitan areas. We can see this downward trend through a number of sources and metrics.
For instance, the Realtor.com report mentioned above showed that the Austin real estate market experienced an 8.8% decline in the median listing price over the past year. That was the biggest annual decline among the 50 largest U.S. metros. Most of the other metros had either a modest decline in listing prices, or a measurable increase.
According to Zillow, the median home value in this market has declined steadily over the past few months. In May of 2023, the company wrote: “The average Austin-Round Rock home value is $485,336, down 6.5% over the past year…”
The chart below shows the median home price for the Austin-Round Rock metro area, going back five years.
Two things will jump out at you. First, you can see the steep increase in prices that began around the middle of 2020, when the COVID pandemic was in full swing. You can also see how Austin-area home prices peaked during the summer of 2022 and began to decline thereafter.
And that brings us to Austin housing market prediction #2.
We believe that home prices in the area still have further to fall, before finding a relative “bottom.” We expect that to happen later in 2023, perhaps toward the end of this year. Beyond that point, Austin-area home prices will likely remain flat for some time, and then gradually turn north again.
Some analysts have offered a more pessimistic home-price forecast for the Austin real estate market in 2024. Back in January 2023, for example, Fortune shared some predictions made by economists at Goldman Sachs.
To quote that Fortune article:
“In 2023, Goldman Sachs expects double-digit home price declines in major markets like Austin (-15.6), San Francisco which includes San Jose, San Diego (-13.4%), Phoenix (-12.9%), Denver (-11.4%), Seattle (-11.2%), Tampa (-11.2%), and Las Vegas (-11.1%). Those markets are also the very places that the home price correction hit the hardest in the second half of 2022.”
They also shared a Goldman Sachs chart with a longer-range forecast extending into 2024. It predicted that Austin-area home prices would continue dropping in 2024, but by a more moderate annual decline of 3%.
Based on current conditions within this real estate market, it does seem likely that prices will continue to drop well into the second half of 2023. But the truth is, the Austin real estate market still has a lot of factors driving demand, including a strong job market. This puts upward pressure on home prices.
On the flipside, there’s currently a lot of downward pressure on prices as well. Higher housing costs and mortgage rates, along with general inflation, have reduced demand among buyers. This in turn has led to the price erosion we just talked about.
Eventually, house values in the Austin real estate market will decline to a level that buyers deem “acceptable.” When that happens, the demand factors mentioned above will begin to push prices upward again.
This is a pattern we are seeing in many major cities across the U.S. in 2023. Austin just happens to be a more extreme example of it. So it will take longer for this real estate market to reach that turning point.
And that brings us to our 2024 Austin housing market prediction #3…
3. Austin will transition from “buyer’s” to “balanced” market.
Over the past three years or so, the Austin metro area has experienced a strong seller’s market. Record-low inventory levels combined with intense demand forced buyers to compete fiercely with one another. These conditions led to skyrocketing home prices across the metro area.
But now, as of mid-2023, the Austin real estate market pendulum is swinging rapidly in the other direction. It’s beginning to turn into a classic buyer’s market.
Homes are taking a lot longer to sell, and sellers are once more offering incentives such as closing cost contributions. We haven’t seen those kinds of conditions since long before the pandemic began.
As a result of these factors, buyers now have more bargaining power than they’ve had for several years. They have more options to choose from, and they’re less likely to have to compete with multiple offers. It’s a more relaxed house-hunting experience.
Here are some recent statistics that underscore this point:
Among the 50 largest metro areas in the country, the Austin area experienced the third-highest increase in “time on market” over the past year. According to the Realtor.com report mentioned above, the time on market for the Austin real estate market increased by 30 days over the past 12 months.
This particular metric shows how long it takes for homes to sell, based on current supply and demand factors. And in this case, it shows that the local housing market has slowed down considerably when it comes to sales activity.
We can also see evidence of this cooling trend by looking at the percentage of homes sold above the asking price. During 2021 and the first part of 2022, most homes sold within the Austin metro area ended up selling for more than the asking price. But, as the following chart shows, that percentage has declined significantly in recent months.
The Austin-area real estate scene has also experienced a significant increase in the number of price reductions. These reductions occur when homeowners initially list their homes at one price, only to reduce the price later on (usually due to a lack of offers).
But these conditions won’t last forever. Eventually, the market will reach a more balanced level of supply and demand. Our prediction for 2024 is that the Austin real estate scene will shift from being a strong buyer’s market toward more “neutral” territory. This shift might even begin later in 2023, depending on when the current home-price downturn reaches its end.
Population growth plays a role here as well, and that happens to be our next prediction for the Austin, Texas housing market in 2024.
4. The metro area population will grow at a slower pace.
Austin became the 10th largest city in the U.S. by population in 2022, according to the United States Census Bureau. The capital city’s population swelled to 974,447 last year, and will likely rise above the 1 million threshold sometime during 2023.
Other cities in the Austin metro area have seen explosive population growth in recent years. In fact, three of those cities (Georgetown, Kyle and Leander) were among the 15 fastest-growing large cities in the United States from July 2021 to July 2022.
But growth is slowing, and this trend will probably continue through 2023 and into 2024.
The population grew by 2.39% in 2023, down from 2.79% in 2022 and 3.12% in 2021. There are a number of factors that may have contributed to the slowdown, including rising housing costs, traffic congestion, and concerns about the city’s affordability.
A slowdown in population growth could affect the Austin-area real estate market in several ways, mainly by reducing buyer demand. This in turn could further normalize the local housing market, shielding it from the extreme conditions that occurred over the past few years.
5. Austin won’t resume its title of “hottest” market anytime soon.
Two years ago, the Austin metro area was widely regarded as being the hottest real estate market in the United States. For example, a January 2021 article from Zillow (based on a survey of real estate experts and economists) stated the following:
“After outpacing all other large markets by the end of 2020, Austin’s housing market is again expected to be the nation’s hottest in 2021, leading a list of mostly Sun Belt cities expected to continue heating up faster than the nation’s large coastal markets.”
But it didn’t take long for that pendulum to swing in the opposite direction. Toward the end of 2022, the real estate company Redfin reported that Austin was the fastest-cooling housing market in the country, at least when it came to home prices.
According to Redfin senior economist Sheharyar Bokhari:
“The forces slowing the housing market, such as high mortgage rates, are having an outsized impact on places like Austin and Boise that saw home prices skyrocket over the last few years.”
Which brings us to our fifth and final real estate prediction for Austin, Texas — don’t expect to see it on any of those “hot lists” again anytime soon.
The Austin metro area became one of the hottest markets in the U.S. for several reasons:
- It offered relatively affordable housing compared to the national average.
- It offered a good quality of life with a mild climate and plenty of cultural activities.
- It received a massive influx of buyers during the early stages of the pandemic.
Today, however, only one of these factors remains in place. With a median home price more than $200,000 higher than the national average, Austin is no longer the beacon of affordability it used to be.
Additionally, the migratory shift that occurred during the pandemic has settled down. Everyone who wanted to relocate due to remote work flexibility or other factors has already done so. The dust has settled. So, for the foreseeable future, we probably won’t see another massive influx of buyers into the Austin area.
Of course, this metro area still offers a good quality of life, with a robust food scene, live music galore, and many other attractions. So it will always be a popular destination for people relocating from other parts of the state and country.
But it won’t be one of the nation’s “hottest” real estate markets again anytime soon.
Disclaimer: This report contains various forecasts and predictions for the Austin, Texas metro area housing market, extending into 2024. They are the equivalent of an educated guess. The publishers of this website lack the mystical powers needed to predict future events with complete accuracy. As such, they make no claims or guarantees about future real estate trends.