Austin Housing Market : Insights into Recent Trends and Market Correction

The Austin real estate market has experienced a significant shift in the past few years, transitioning from rapid appreciation to a period of stabilization. The median home price in Austin soared from $305,000 in early 2020 to a peak of $550,000 in May 2022. However, as mortgage rates increased and economic conditions shifted, prices adjusted downward, with the median home price settling at $400,000 by early 2025. This market correction has predominantly impacted the lower and mid-tier price points, while luxury properties have remained stable or even appreciated.

How Market Correction Affects Different Price Segments

One of the most noticeable aspects of Austin's housing shift is the way different price tiers have been affected. The lower and mid-tier segments have seen more significant declines, while luxury homes have retained or even gained value. Data from Team Price Real Estate’s Percentile Analysis illustrates this clearly. For instance, the 10th percentile home price across various cities in the Austin metro area indicates how entry-level buyers are faring. In Jarrell, the lowest 10% of homes are priced at $249,350, while in Austin, the threshold is much higher at $314,870. This spread shows that affordability varies significantly based on location, with areas further from the city center offering lower-cost options.

Meanwhile, in the luxury market, homes in the 90th percentile in Austin are priced at $2,157,500, while in surrounding areas such as Dripping Springs ($2,396,500), Spicewood ($2,492,000), and Wimberley ($2,156,500), luxury properties continue to demand premium pricing. This suggests that while demand for mid-priced homes has softened, high-end buyers are still actively purchasing, contributing to price stability in the luxury segment.

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Year-over-Year Changes and Market Trends

A closer look at year-over-year trends from February 2024 to February 2025 reveals key patterns in home prices and sales volume. In Austin, total sales declined by 23.3%, reflecting a slowdown in transaction activity. Additionally, the median price per square foot dropped by 7.3% at the 50th percentile, a sign that home values in the mid-market range have softened.
However, not all cities in the metro area have followed the same trajectory. Driftwood saw a dramatic 196.7% increase in sales, driven by high demand in luxury homes, particularly at the upper price tiers. Georgetown and Cedar Park saw moderate declines of 7.2% and 10.4%, respectively, showing a slower but still present cooling effect. Elgin saw a surprising 105.6% increase in sales activity, possibly due to its affordability, with a 10th percentile home price of just $265,000.

Interestingly, while sales volume in many areas declined, the 90th percentile price per square foot actually increased in select areas, including Liberty Hill (+14.6%) and Wimberley (+30.3%). This data underscores the fact that while affordability concerns impact lower-tier buyers, demand remains strong for high-end properties.

Active vs. Sold Inventory: Supply and Demand Insights

Looking at inventory and active versus sold price data, we can see how supply levels are affecting pricing dynamics across the region. Austin currently has 4.8 months of inventory, meaning the market is approaching a balance but is still slightly favoring sellers. Bastrop has 5.9 months of inventory, indicating a transition toward a buyer’s market. Burnet, with 8.8 months of inventory, has shifted fully into a buyer’s market, as properties are taking longer to sell. Jarrell, despite lower home prices, has only 4.0 months of inventory, suggesting steady demand at its price point.

At the same time, active listings are showing notable price gaps compared to recently sold homes. For example, in Driftwood, active home prices are 182.8% higher than recent sales, while in Spicewood, active listings are priced 149.2% higher than what has actually sold. This suggests that in some high-end areas, sellers may be overpricing their properties relative to current demand, which could lead to price corrections in these markets if properties remain on the market too long.

Luxury Market Resilience and the Future of Austin Real Estate

Despite market corrections in mid-tier and lower-priced homes, luxury properties have remained resilient. The highest-priced homes in Lakeway ($1.9M), Spicewood ($2.49M), and Wimberley ($2.16M) continue to see steady demand, demonstrating that affluent buyers are still willing to invest in premium properties. Looking forward, the Austin housing market is expected to stabilize further in 2025, with moderate price growth of 3-4% projected for the next year. The region’s strong job market, economic diversity, and ongoing population growth will continue to drive housing demand, even as affordability remains a concern for lower-tier buyers.

Final Thoughts : The Austin housing market has undergone a notable shift, with lower and mid-tier price segments facing downward adjustments while the luxury sector has remained stable or seen appreciation. Buyers searching for affordable entry points may find better opportunities in areas like Jarrell, Elgin, and Kyle, while sellers in the luxury market continue to benefit from strong demand. As the market stabilizes, those looking to invest in real estate—whether buying, selling, or holding—should closely track how pricing trends evolve in the coming months.