Austin, TX has been known to be one of the hottest landing spots during the 2021-2022 housing boom.
Here’s a few of the reasons why:
- Interest rates were low, so houses sold at inflated values
- Austin was becoming the new Tech Hub of the South
- Tesla had just built their Gigafactory 10 minutes away
But now 3 years later, things have completely changed
- Massive lay-offs in tech across the board. Including 167,000 in Q3 2023 alone, crushing Austin’s tech scene.
- Tesla laying off 2,700 workers in Austin
- People that moved here realizing Texas is Too Damn Hot
So what’s happening now? People are leaving.
Austin is ranked 5th in cities people are moving out of in 2024.
Given this – The expectation is that more houses would be selling as people begin to relocate.
But that’s not the case. There are 15.9% less homes being sold this year.
Why? The reason is simple. They can’t afford to.
Interest rates in 2022 were sub 3%. Today in 2024, they are pushing past 7%.
For perspective, a $500k house (20% down) in 2022 would cost $1,686/monthwhile today it would cost $2,661/month.
That means your $500k house you bought in 2022 would be the same payment today as a $360k house. You lost $140k in value.
So what’s the effect?
Well, Austin Rental prices have dropped faster than my New’s Year Resolution in February. (There’s always next year)
But seriously – the stats don’t lie. Austin’s Median Rent Prices have dropped -7.3% compared to the national average of -0.8%
Don’t get me wrong, Austin is doing just fine. It has tons more residential and commercial developments in the works, but has definitely come back down to earth after the surge a couple years ago.
But for those that overpaid by 25% during the gold rush of rates – This one’s for you! 🍻
Please reach out if you have commercial real estate needs in Austin, TX.
Tristen Palori
Office: 512-580-7800
Email: tpalori@foresitecre.com
License: #717593
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Tristen Palori