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Getty Images; Tyler Le/BI
By James Rodriguez
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2026-08-05T08:24:01.258Z
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Ryan McPherson fought hard for his piece of Austin. Back in the spring of 2022, when it seemed like everyone was angling for homes in the Texas capital, he and his wife set their sights on a tidy four-bedroom in a sprawling new development on the east side of town. They bid $20,000 above the asking price, stretching the total to $615,000, and penned a heartfelt letter to the sellers to lock in the deal. Austin was booming, and if the previous two years were any indication, that price might soon seem like a bargain.
"Everybody that I worked with, they kept saying Austin only goes up," says McPherson, a surgeon who moved to the city for a job.
McPherson's timing, however, couldn't have been worse. In the four years since he grabbed the keys to his new place, asking prices in the Austin metro have plummeted by nearly 25%. No major city has seen a steeper fall, Realtor.com found. The rental market is also among the country's softest, with landlords handing out discounts to lure potential tenants. California expats flocked to the Texas capital at the start of the work-from-home era, but last year, more people left Austin for San Francisco than the other way around.
Jordan Vonderhaar for BI
The roots of the slowdown are no mystery. Developers built a ton of new homes, which, coupled with fewer cross-country moves and a painful rise in mortgage rates, put the brakes on Austin's runaway prices. Plenty of other pandemic-era hot spots — places like Boise, Denver, and Phoenix — have also seen prices go south in the past few years, but even among these once raging cities, Austin's long, painful hangover stands alone.
"The market got super out of whack, super quickly," says Joel Berner, an Austin-based senior economist for Realtor.com. "We're just still slowly recovering from that."
Things might have worked out for McPherson if he had stayed in Austin for the long haul. Housing forecasters remain mostly bullish on the city, which continues to draw big-name employers and young, well-paid workers. Even today, agents tell me listings in coveted neighborhoods regularly attract multiple bidders. But McPherson quickly soured on Austin. He liked his neighborhood but hated the endless traffic, the crowds, and the steep cost of living. Now back in his hometown of Phoenix, he and his wife are preparing to list their Austin home for sale at a hefty loss. An experienced local agent has told them she thinks it could sell in a few months for somewhere between $420,000 and $450,000 — a roughly 30% haircut — but even that sounds ambitious to McPherson, who knows they'll be competing against the swarm of nearby homebuilders offering huge perks to keep inventory moving. Still, he's ready to cut his losses.
"I'm not going to keep trying to wait this out and pray that there's a turnaround, because it's not coming right now," McPherson tells me, "I'd rather just stop losing sleep over it."
Austin had a lot going for it at the start of the decade. With mortgage rates at record lows and white-collar workers untethered from big office buildings, the central Texas oasis quickly emerged as a prime destination in the housing shuffle. Austin had long offered lower taxes and cheaper homes than pricey coastal hubs, but it looked particularly appealing to anyone squeezing into makeshift home offices in New York, San Francisco, or Los Angeles. Between 2020 and 2022, Austin's population swelled by 5.3%, or more than 120,000 people, per census data, making it the fastest-growing large metro in the country.
Jordan Vonderhaar for BI
"Ironically, affordability was the big draw," Berner tells me. That didn't last long. In August 2021, asking prices were up more than 36% year over year. By the time Austin-area prices peaked the following spring, the typical home there cost more than $465,000, about 50% more than it had three years earlier.
"Things were just going gangbusters," Berner tells me. "Prices were getting totally out of control."
Desperate buyers weren't the only ones clamoring for a slice of Austin. Builders saw dollar signs and got busy churning out homes to meet the growing demand. Between April 2020 and July 2025, the Austin area's housing supply (both for-sale and rental) grew by more than 20%, or roughly 211,000 units, according to census estimates. "It was pretty dramatic," says Keith Hughes, an Austin-based executive at the housing research firm Zonda.
Things were just going gangbusters. Prices were getting totally out of control.Joel Berner, senior economist at Realtor.com
Beginning in March 2022, though, the Federal Reserve began jacking up interest rates to fight inflation. Rates for home loans quickly followed — between December 2021 and July 2022, the typical mortgage rate jumped by nearly three percentage points, from less than 3% to the 5%-6% range. For most potential buyers, the massive swing meant paying hundreds of dollars more in interest each month. The rate spike was enough to pour cold water on Austin's historic run.
"Everything was going into multiple offers, and then it really just stopped," says Lindsay Neuren, an Austin real estate agent. "That really spooked the market."
It usually takes a year or two for homebuilders to translate demand signals into fresh three- and four-bedrooms, which meant that the bulk of those new units hit the market right as many buyers came down with a case of cold feet.
Economists often talk about a "Nike swoosh"-shaped recovery after financial calamity — a steep drop, followed by a slow climb upward. Berner likens Austin's trajectory to an inverted swoosh, with Austin-area prices seeing a quick jolt followed by a long drift downward. This July, the Austin area's typical asking price was down nearly 12% from a year prior, Realtor.com found. Buyers, meanwhile, can afford to be picky, with far more options at their fingertips than before the pandemic. Roughly 12,700 Austin-area homes were sitting on the market in July, compared to about 8,000 at the same point in 2019.
"The game has completely changed," Berner tells me.
Gary Froniewski and his wife began hunting for an Austin home in early 2022, after their landlord hiked their monthly rent by $300. Most places they came across needed a lot of work and seemed "incredibly overpriced," Froniewski tells me, but they ended up snagging a three-bedroom condo in North Austin shortly before it officially hit the market. Though the price still felt steep, "it wasn't in that ridiculous range," he says. They closed in July of that year.
Jordan Vonderhaar for BI
Froniewski has been keeping an eye on the market since. Based on nearby sales and his own property tax assessments, he estimates that his home has shed as much as half of its value.
"I expect to take a haircut on this, no matter what," Froniewski tells me. "It's just a matter of how devastating it ends up being when we're ready to actually move."
Fortunately for Froniewski, he and his wife have no plans to make a change. Four years since Austin's homebuying frenzy came to an abrupt close, though, other owners are staring down sizable, soon-to-be realized losses. A whopping 79% of Austin-area homes that traded hands in 2022 are now worth less than their sale price, according to a Realtor.com analysis.
I expect to take a haircut on this, no matter what. It's just a matter of how devastating it ends up being when we're ready to actually move.Gary Froniewski, Austin homeowner
Cynthia Mattiza, a longtime Austin real estate agent, is marketing one home on behalf of clients who bought in 2022. The experience is jarring, since they bought at a time when the attitude was "whatever it takes to win," and now they're pricing at a loss. "We're just thankful to receive any offer sometimes," Mattiza tells me.
John Mundell, another local agent, recently helped sellers offload their home in the suburb of Buda for $30,000 less than they'd bought it for a couple of years ago. "They're kind of screwed," Mundell tells me. "But they had to move."
The shift in Austin's market has reshaped the calculus for sellers who, a few years ago, might have presided over bidding wars. Because Austin-area rents have fallen off as well, would-be buyers are willing to stay put and let the math work in their favor. A common tactic these days, agents tell me, is to list a home for sale and for rent simultaneously, testing the waters to see whether becoming a landlord might stave off a loss. Buyers in the heat of competition might have once brushed off a stained carpet or looming repairs. These days, Mundell says, the onus is on the seller to do that work before sticking a for-sale sign in the front yard. In a similar vein, Mundell says he might take a pass on a client whose home has been languishing on the market, since the money he'd make may not justify the months of work required to secure a willing buyer. I'll admit I was surprised when he told me this — sellers are generally seen as the more valuable clients among agents, since they practically guarantee a commission.
"I'd take anything before," Mundell says. "Now I'm just being a little more selective."
The sellers in dire straits are those in areas with lots of new homes popping up — people like McPherson, whose location in a still-growing community means he's going head-to-head with homebuilders in the fight for buyers. Big developers can use their in-house lenders to dangle cheaper mortgages in front of house hunters, an option known as a "rate buydown." That kind of deal, combined with all the bells and whistles of a newly built home, makes it "very, very hard for resale homes to compete," Neuren tells me.
McPherson tried renting out his home in June 2025, when he and his wife moved back to Phoenix. The $2,500 monthly rent didn't come close to covering his $4,000 outlay for the mortgage and other expenses, but it did buy him some time. With those tenants gone now, though, he's facing a situation that he says has only worsened as more new construction crops up.
"Life taught me an expensive lesson," McPherson tells me. "Hopefully, I don't repeat these mistakes."
If you're a card-carrying YIMBY who believes that building more homes is the best way to bring down prices, Austin offers the most high-profile case study of the past decade. Compare the city to San Francisco, which built hardly any homes over the past few years and is now reckoning with a run-up in home values that makes Austin's growing pains seem quaint.
"I think that is maybe the lesson for the rest of the country," Berner tells me. "If you think home prices are too high, the solution is to build."
When I spoke with Berner in mid-July, he had just received a bittersweet property tax ruling on his central Austin home, which he purchased in 2023. He'll pay less this year, he says, after the county agreed to lower its assessment of his home's value by 12%.
"If I had a crystal ball and saw that my home would basically not appreciate in the three years that I owned it, and I could have continued renting for about two-thirds of what I pay in my mortgage, I probably would have stayed renting," Berner tells me. "But I didn't have that crystal ball."
Jordan Vonderhaar for BI
The people I spoke with nevertheless pointed to signs of stabilization in the Austin market. Mattiza, the local real estate agent, notes that areas with good schools and fewer homes for sale are still likely to draw multiple offers, though they're not coming close to the crazed bidding wars of 2022 — ultimately a "healthier" scenario for all parties involved, she says. And while overall metro prices are falling, price reductions are less common than a year ago, suggesting sellers are getting more realistic. In June, pending sales were up 11% year over year. "Sellers have just been slowly adjusting to meet buyers," Berner says.
Hughes, the Zonda executive, expects Austin prices to bounce back in the long term. In Zonda's nationwide ranking of markets by "fundamentals," which takes into account factors like demographics and employment, Austin comes out on top. The metro has the largest share of millennials and has drawn more high-income workers than any other market since 2019. Builders may not be rushing to open more doors, but they're quietly laying the groundwork for future developments with an eye on 2027 and beyond. "The underlying conditions support a comeback," Hughes says.
Froniewski hopes to see that rebound, but he's also at peace with the decision he and his wife made back in 2022. "I'm a firm believer that you can't time the market," Froniewski tells me. "You never know when the peak is, and you never know when the bottom is."
Then again, there are always what-ifs.
"If I had to sell the house today," Froniewski says, "I would be in shambles."
James Rodriguez is a correspondent on Business Insider's Discourse team.
Business Insider's Discourse stories provide perspectives on the day's most pressing issues, informed by analysis, reporting, and expertise.
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James Rodriguez
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James is a real estate correspondent on Business Insider's Discourse team. His pieces tackle the most fascinating storylines in real estate, helping readers make sense of an ever-shifting housing landscape.His biggest stories have highlighted the challenges for millennial homebuyers, the stakes in the legal battle between Zillow and Compass, and changes in how buyers and sellers pay their agents. He's also written about the rise of "accidental landlords," the end of casual house hunting, why big investors are buying stakes in Americans' homes, and the race to create the "Amazon of real estate." He regularly appears on nationally syndicated radio, television, and podcasts, including This Morning with Gordon Deal, Marketplace, Vox's Explain It To Me, and CBS News. His 2025 profile of Compass CEO Robert Reffkin was named best overall entry by the National Association of Real Estate Editors. His coverage has won several other NAREE awards, including the gold award for best collection of residential real estate coverage and the Kenneth R. Harney award for best consumer-education reporting.Prior to joining Business Insider, James covered commercial and residential real estate for the Denver Business Journal. He is a graduate of the University of Texas at Austin.
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