The downtown skyline in Austin, Texas, on April 11, 2023. The city will see a housing market correction, analysts say.

Newsweek reports, "Austin, Texas, the fastest-growing large metro area at the height of the COVID-19 pandemic, is set to see house prices plummet as sellers look to come to terms with buyers who are interested in purchasing homes but struggle to contend with elevated prices, analysts told Newsweek.

The city saw population growth of 5 percent between 2020 and 2022, and housing demand helped push up prices.

"There is so much in-migration of households that has been a real support for both rental and owner occupied housing markets," Brad Case, chief economist at real estate developer Middleburg Communities, told Newsweek.

That dynamic is shifting, Case suggested, as buyers balk at the high prices, which will force sellers to adjust.

"If you are a homeowner in Austin, you were really happy when house prices were going up so sharply because of the added demand," Case said. "Then the new supply came in, and now you're looking at the possibility of having to take, not necessarily a lower price than you paid when you bought, but certainly a lower price than if you had sold a year ago. So, there is an oversupply problem in Austin."

Austin's housing inventory is now above pre-pandemic levels, defying trends seen elsewhere in the country. This is partly because prices are 55 percent above where they were in 2019, Hannah Jones, an economic research analyst at, told Newsweek.

"Prospective home buyers at Austin can't contend with prices where they are, which is part of the reason that inventory is building up," Jones said. expects home prices in the city to come down by 12 percent next year, a trend that began this year.

"We saw Austin really, really boom and you know we expect to see it correct," Jones said"Now that mortgage rates are high and home prices are still high, demand has fallen off and so inventory is building up. And so because of that, we expect prices to fall next year in Austin."

The price correction that is expected to shape the housing market in Austin will also happen across the country, though to a lesser extent. anticipates home prices to fall by close to 2 percent in 2024.

Mortgage rates are expected to decline next year, which should give prospective buyers some relief with their monthly payments.

"While that's not going to be a full return to affordability, it's going to be baby steps in that direction," Jones said."Housing payments are going to be slightly lower and so a few more buyers are going to be able to enter the market."

In Austin's case, it is an example of a city that witnessed oversupply caused by demand driven by population growth that now will see a decline in prices from their peak.

"I don't think that is going to reduce the appeal of a place like Austin for potential migrants. They will still want to live there," Case said. "It's just the people who bought houses there or buy houses in the next few months may find themselves, not necessarily underwater on their mortgage, but certainly with an asset that's worth worth less than when they bought it.""

Source: Newsweek

Written by: Omar Mohammed

Published: December 19, 2023

Posted by Grossman & Jones Group on


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