The Current State of Real Estate in Austin, Texas: Why Now is the Time to Buy

The Current State of Real Estate in Austin, Texas: Why Now is the Time to Buy

If you've been considering buying property in Central Texas, now is the time to act. The real estate market here is offering an unprecedented opportunity for buyers—one that hasn’t been available in years. After what we saw in 2021, when inventory was so low that it made even me start questioning my place in Austin, things have shifted dramatically.

Today, we’re seeing very flexible sellers who are willing to work with buyers in a way that simply wasn’t possible in the recent past. For those looking to purchase, this is a golden opportunity. There’s leverage today that hasn’t existed in years, and we’re starting to see new buyers in the area—folks who might never have considered homeownership in Austin before.

These buyers are going to be the big winners over the next few years. Why? Because property values in Austin are likely to rise as the market stabilizes. As property values increase, those who secured homes at today's rates will have the opportunity to refinance and lock in better terms. But the clock is ticking—once interest rates drop, we’re going to see a gold rush for property in Austin, and we’ll likely see this play out in other hot real estate markets across the U.S. as well.

The Austin Real Estate Market: A Roller Coaster Ride (2019–2024)

Over the last five years, Austin's real estate market has been on an emotional roller coaster. Between 2020 and 2021, we saw a massive surge in home prices, driven by historically low interest rates and high demand. By February 2021, the median home price had climbed to $562,500—a 20% increase in just six months.

In 2022, Austin’s market hit a peak with a median price of $730,000 in May. But as interest rates rose and the economy adjusted, we saw a significant drop. By December 2022, the median price had fallen to $563,401—a 30% decrease.

As we head into 2024, Austin's real estate market is starting to stabilize. In fact, early 2025 data shows the median sold price is around $515,000—reflecting a modest 3% year-over-year increase. While we’re not seeing the sky-high prices of 2022 anymore, we’re still in a strong position for those looking to buy.

Comparing Real Estate with Other Investments

While the Austin real estate market may have experienced volatility, it’s important to compare the returns on real estate investments with other vehicles, like the stock market.

The Stock Market (S&P 500): Historically, the S&P 500 has delivered an average annual return of 8% to 12%, depending on the timeframe and whether dividends are reinvested. Over the past five years, this has been closer to 10% on average.
Real Estate (Austin and U.S. Housing Market): In comparison, the U.S. housing market, including Austin, has provided a more modest average return of about 5.5% annually over the long-term. However, Austin’s market has outperformed many other U.S. cities, and the past few years—despite the fluctuations—still show a positive upward trajectory.

What Does This Mean for Buyers?

Leverage While It Lasts: We’re currently in a unique position in the Austin market where buyers have more leverage than in previous years. Sellers are more flexible, and this is the time to negotiate favorable terms. If you’re considering buying, now’s the time to make your move before competition increases.
Think Long-Term: While real estate may not always see the same dramatic annual returns as the stock market, it provides stability and the opportunity for long-term wealth. Austin’s market may have experienced ups and downs in recent years, but the city’s growing tech sector, strong economy, and desirability as a living destination make it a solid long-term investment. Buyers today will see big benefits in the next few years when values go up again.
Get Ready for Refinancing: Once interest rates eventually drop and the market cools, refinancing will become a powerful tool. Those who secure homes now at today’s rates will be positioned to refinance and lock in better terms when the market stabilizes.

Factors That Could Affect Future Real Estate Decisions

One important factor to keep in mind is the broader economic landscape. Interest rates are unlikely to settle down unless there’s consistent economic policy in place. Right now, we're not seeing that kind of consistency from elected officials, which is causing uncertainty in the market. Until there’s more clarity on the economic front, some buyers may hold off on making real estate decisions. That said, those who move quickly may be able to secure properties with favorable terms before rates become more unpredictable.

How Should You Prepare for the Future?

Take Advantage of Today’s Market: With flexible sellers and competitive prices, this is the moment to get into the market before rates go down and demand spikes again. Don’t wait for the inevitable gold rush that will follow when rates fall.
Invest for the Long Haul: Real estate isn’t a short-term game. If you’re in it for the long run, you’re positioning yourself for success as property values rise and interest rates eventually drop. Don’t get caught up in short-term fluctuations—focus on your long-term financial goals.
Look Beyond the City Core: While the heart of Austin may be experiencing price hikes, nearby areas like Round Rock, Cedar Park, and Georgetown are also seeing significant growth. There are still great opportunities for investment in these neighboring areas.
Understand the Economic Factors: Keep an eye on interest rates and the economic policies coming from our elected officials. The lack of consistent economic policy could cause continued volatility, but those who act quickly may still benefit before the market shifts again.

Final Thoughts

If you’ve ever wanted to own property in Austin, now is the time to act. While we’ve seen some ups and downs over the past few years, the market is poised for growth in the near future. Buyers who secure homes today will be in a prime position to benefit as property values rise, and once interest rates go down, we’re likely to see a rush of buyers flooding the market.

Prepare for the future by making strategic decisions now, and get ready for a rewarding long-term investment.