Austin realtors push back on Central Texas real estate market ‘bust’

Either way, it’s impossible to argue with the numbers. Following a high of $550,000 in May, median home prices in Austin fell to $537,000 the following month, and for the rest of the year, continued to fall. In December, the most recent data available, that number was $525,250.

According to Zillow, the Austin housing market is “ice cold,” falling out of the top 10 for hottest real estate markets after topping the list in 2021 and landing at 10 last year. A story in the Real Deal describing an apocalyptic memo from Goldman Sachs to clients about incoming recession-style housing busts, including in Austin, features a lead image with a thermometer positively exploding from the heat.

Mixed metaphors don’t travel between publications, but it’s clear the new reality for Austin real estate is an extreme shift from a year ago. MySA spoke with some Austin realtors about what it’s really like on the ground as the real estate market inevitably shifts from where it was one year ago.

Media Spin

Ashley Jackson, a longtime Austin real estate agent and the president of the Austin Board of Realtors, calls the current Austin housing market a “stabilization,” rebuking the notion that six months of a downward trend means the housing market is over. She says the Austin market has returned to a more normal pre-pandemic form, one that was already attractive to buyers. 

The last 18 months have been characterized by stories of low inventory, cash offers regularly trumping those needing financing, and offers regularly soaring above asking. Heavy bidding wars, like the ones written about in the New York Times Magazine in November 2021 and in this publication last spring, have slowed as buyers haven’t had to compete with each other as much.

“Suddenly, they had a more stable marketplace in which to find a home; it meant they had some options,” Jackson says. “Some buyers have even enjoyed getting homes under the list price.”

During the pandemic, Jackson says, she had buyers who were offering as much as $100,000 over asking prices for homes.

“We don’t have to do that right now,” she says.

Jackson says everything changed when federal interest rates began to skyrocket in late April 2022. Naturally, with listings prices still increasing but rates edging past five percent, many folks were priced out of the market and stopped looking.

But she chafes at the idea that the Austin housing market is “ice cold” or “overheated” or whatever weather descriptor the media decides to use to describe it. It’s a great time to buy, she says, even with higher interest rates. She points to Austin’s vibrant economy, the continued migration to the city, and large companies moving operations to Central Texas as reasons why people will still need to purchase homes here.

Jackson says real estate needs to be examined on a hyperlocal level, and even Zillow doesn’t have its finger completely on the pulse. The day we speak she is closing two deals, one with multiple offers. 

“You’re not going to see a headline about that,” Jackson says.

A New Reality

“I was extremely nervous about it at first,” says Austin real estate agent Kristin Kreisel, of the downward trend in home prices beginning last spring. Kreisel started working in Austin real estate more than eight years ago. For almost the entire time, Austin has been a seller’s market. 

But with the shift, she has adopted an almost Buddhist outlook on how to respond to something that is out of her hands.

“I’m not in control of the market; I can only help my clients to respond to it,” she says.

With sellers who may not yet be used to their evaporating leverage, managing expectations has been key for Kreisel. Whereas in 2021 and the earlier part of 2022, suitors came running with their arms full of cash, sellers now have to, in many cases, agree to pricing more competitively and being willing to make reductions if offers are scant. These are all components Kreisel has to have ready regardless for clients, but in a buyer’s market, the numbers dictate the way these conversations go.

“The process for me hasn’t changed,” she says. “The data has changed.”

Kreisel says she has fewer investor clients now than before and that some homes still have all-cash buyers and multiple offers, but the equilibrium has been restored a bit. 

“A year ago, a buyer was giving up everything,” she says. “If they wanted a day to have the house inspected, they were getting passed up. And if you’re spending hundreds of thousands of dollars on something, you should understand the health of that home.”

The reduction in home pricing, while negatively affecting sellers on a macro level across the board, might just be what the city needs to return to some semblance of normalcy in a real estate market, which seemed for many — particularly buyers — completely overwhelming.

“In some ways,” Kreisel says, “I think there’s been some relief on all sides.”

Jackson agrees. Inventory has increased 1.6 months year over year to 2.1 months (though in ABoR’s most recent newsletter, the organization includes a quote from Independence Title claiming inventory could drop up to 20% in 2023 as builders scale back).

“I can tell you that over the past six months or so, as a buyer’s agent, it’s been a relief,” she says. “It was painful to watch our buyers give up so much to get a home under contract.”