Austin Housing Market Forecast: Will Home Prices Drop 12.5% by 2028?

Austin Housing Market Forecast: Will Home Prices Drop 12.5% by 2028? The Austin real estate market has undergone significant shifts in recent years, with changing affordability dynamics, rent fluctuations, and broader economic factors influencing housing trends. As we look ahead, the relationship between median home prices and rental rates provides a critical lens through which we can evaluate potential future price adjustments. Based on historical data and current market trends, we can estimate the trajectory of home prices and rent over the next three years.

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Recent Price Trends in Austin

The median sold price in Austin has experienced notable fluctuations, peaking at $550,000 in May 2022 before declining to $409,000 as of January 2025. This represents a 25.6% decline over 32 months. The most recent year-over-year change shows a -4.1% decrease, indicating a cooling period following the rapid appreciation seen during 2020-2022. While the past year has seen median prices ranging from $425,000 to $450,000, the recent dip to $409,000 suggests a continued downward trend.

Historical data shows that Austin's market cycles typically last between 36 to 48 months from peak to trough, with recovery periods often extending beyond that. If current trends hold, we expect additional declines, though at a more moderate pace compared to the sharp corrections observed in 2022 and early 2023.

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The Impact of Rent Declines on Home Prices

Rent prices are a key component in home price valuations, particularly when evaluating the price-to-rent ratio, a fundamental measure of housing affordability. As of early 2025, the median rent in Austin stands at $2,100. Given current supply levels and economic conditions, a projected 5% annual decline in rent over the next three years is a reasonable expectation. This would bring the median rent down to approximately $1,891 by 2028.

Historically, the median sold price to rent ratio has averaged around 13.5, yet the current ratio stands at 16.2, indicating that home prices may still be overextended relative to rental yields. If the market returns to this historical ratio, we anticipate a further decline in home values.

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Projected Home Price Decline

If rent prices decrease by 5%, the median home price would need to adjust downward to maintain a balanced affordability ratio. Given this, a 12.5% decline in home prices over the next three years appears to be a reasonable projection. This would bring the median sold price to approximately $357,875 by 2028.

This estimated decline aligns with previous market cycle corrections, where downturns ranged from 10% to 16% over multi-year periods. However, several external factors could influence the rate of decline, including interest rate adjustments, employment growth, and new housing supply levels.

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What This Means for Buyers and Sellers

For buyers, a projected decrease in home prices suggests potential opportunities to enter the market at lower price points. As affordability improves and interest rates stabilize, demand could begin to increase, helping to form a price floor.

For sellers, the ongoing decline underscores the importance of pricing homes competitively. Overpricing in a declining market can lead to extended time on the market and potential price reductions. Understanding local trends and pricing homes in line with market expectations will be crucial.

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Final Analysis 

Austin’s real estate market is in a period of price rebalancing, with a projected 12.5% decline in home prices and a 5% decrease in rent over the next three years. These shifts suggest that affordability will gradually improve, creating opportunities for buyers while requiring strategic pricing approaches for sellers. Monitoring economic conditions, supply trends, and mortgage rate movements will be key factors in assessing the future trajectory of Austin’s housing market. 

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