When Austin’s housing market freezes, sellers face a new reality: less money for their homes
In Austin, 14% of all listings have a risk of selling less than homeowners. This is twice the 6% share last year, the second highest among the top 50 metros. Nationwide, there is a risk that 6% of sellers will lose money on sales.
However, shares vary widely depending on when someone bought their home, and those who buy these days tend to be at greater risk.
48% of post-pandemic sellers risk losing money on sales. This is the highest share in the country. Nationwide sharing is 16%. 32% of sellers who purchase during the pandemic risk losing money on sales. Nationwide, this share is 9%. 0.5% of sellers who purchased pre-pandemic purchases are at risk of losing money on sales, far below 2% nationwide.
The Austin housing market is distorted significantly in favor of buyers as prices drop and stocks rise. Metro’s dramatic pandemic-era price fluctuations mean that sellers who buy at peak risk losing money on sales. The value of the house rose sharply from 2020 to 2022, but fell sharply over the next few years.
That’s not to say that Austin’s homesellers are actually coming out in the back. Sellers facing financial losses usually pay the asking price and wait until they find a buyer willing to return home from the market or rent. Moreover, the majority of sellers still make money from home sales. Nationwide, 94% of homes are on sale than they buy, compared to just 37% in 2012.
How has the housing market changed in Austin since the pandemic?
Austin is a child on the Pandemic Boomtown poster. From 2020 to 2022, it was one of the hottest cities in the country, attracting people with its hip culture, affordable prices and low tax rates. By April 2022, the popularity had increased prices by 71%.
However, later that year, prices had already begun to fall. Since then, they have not stopped the decline. The rise of AI in priced residents and coastal high-tech hubs has led businesses and workers to leave the trendy Texas Metro and return to the coast.
Today, the Austin housing market is experiencing one of the nation’s largest price corrections, exacerbated by climate risks and increased insurance prices. This means that homeowners who buy at peak are at the highest risk of selling at loss.
A drop in prices creates a bigger gap
If prices fall by the end of the year to match Redfin’s forecasts, more sellers will be more susceptible to losing money at home. Even the most affected metros will see a significant increase in New Brunswick, New Jersey, Providence, and RI.
If prices drop at the predicted 1%, 15% of Austin’s list is at risk. A 3% drop in price puts 17% at risk. A 5% drop in price puts 19% at risk.
Those who bought before the pandemic face the lowest risk of losing and selling, but the lower mortgage rates make them less likely to move in the first place.
How buyers and sellers navigate the Austin market
The Austin housing market has changed dramatically since the pandemic, creating more opportunities for buyers and putting pressure on sellers.
Buyers: Market buyers are generally commanders in Austin, as housing costs are higher and there are more homes in the market. They should negotiate when the right home comes and be prepared to move quickly. Sellers: Sellers generally don’t have the bargaining power they have during the pandemic, so they may need to provide incentives to attract what is left of the buyers.
Complete Metro-level data
Methodology
The largest US Metros of the 50 largest are based on a Redfin report that analyzed the active list of MLS in May. All housing data is from Redfin.
The report identifies the share of sellers who are actually losing their homes and selling them, not the share of sellers who are at risk of losing their homes and selling them, and does not take into account the costs of closing. The pandemic was defined as the highest rise in home prices between July 2020 and July 2022. For more information, see the methodology in the original report.
