Austin Short Sales Surge 148% Year Over Year – September 2025 Report

Austin Short Sale Market Report – September 2025

Short sales in Austin have surged by 148% year over year, representing one of the sharpest increases in distressed listings the region has seen in more than a decade. On September 19, 2024, there were just 29 active short sale listings across the Austin-Area MLS. Today, that number has climbed to 72 active listings, with an additional 29 homes pending. The rapid acceleration underscores a meaningful shift in the local housing market, as financial pressure leads to a rising supply of distressed properties.

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Short Sale Inventory Skyrockets

The year-over-year jump from 29 to 72 active short sales reflects a 148% increase. The growth is even more striking when compared to October 2023, when there were only 5 active and 5 pending short sales in the entire MLS. In less than two years, short sale activity has expanded more than 14-fold, reshaping part of the Austin property market that had been quiet for years.

The average list price for the 72 active short sale homes is $375,475, far below the broader MLS median sold price of $420,000. Of these active short sales, 39 (54%) have already reduced their asking price, cutting an average of $45,666, or 11.3%. Pending short sales are transacting at even lower values. The average pending list price for the 29 homes under contract is $318,122, highlighting the discounts often seen in distressed transactions.

Buyer and Seller Dynamics

For buyers, the rise in distressed inventory creates leverage. More than half of short sales have price cuts, and the average pending price is well under market averages. However, these opportunities come with longer timelines, since lender approval is required before a transaction can close. For distressed sellers, the competition has intensified. With more short sales hitting the market, many listings must be marked down before attracting offers. The average 11% price reduction illustrates how sellers in this category are being forced to adjust expectations quickly.

Investor Opportunities

For investors, the numbers offer a compelling data point. Roughly one-third of Austin ZIP codes now show cap rates above the six-month Treasury bill, meaning that for many submarkets, real estate income yields are finally outpacing risk-free benchmarks. Pairing that with the discounts available in the short sale segment creates opportunities for disciplined acquisitions. Investors who model conservative rents and realistic hold periods may find stronger entry positions than at any point since the 2022 peak.

Market Context

Even though short sales have surged, they still represent a small share of total inventory—72 short sales out of more than 16,800 active MLS listings. This is not a foreclosure crisis, but it is a clear warning sign. After years of minimal distressed activity, Austin is now seeing a measurable rise, and the speed of growth suggests that short sales will remain a feature of the market moving forward.

FAQ – Austin Short Sale Market

What does short sale mean?

A short sale occurs when a homeowner sells their property for less than the mortgage balance, with lender approval. In Austin, short sales are now averaging $375,475, significantly below the region’s median sold price.

Is a short sale bad for the buyer?

Not necessarily. Buyers can often secure properties at a discount, as shown by Austin’s pending short sale average of $318,122, well under the market median of $420,000. The trade-off is that short sales usually take longer due to lender approval requirements.

How does a short sell work?

The seller lists the property with the lender’s consent, and a buyer submits an offer. That offer must then be approved by the lender, who is agreeing to accept less than what is owed on the loan. In Austin today, more than half of short sales have price cuts, and many finalize at discounted values compared to market averages.

Why are short sales increasing in Austin?

Active short sale listings rose from 29 in 2024 to 72 in 2025, a 148% increase. Pending short sales also rose from 9 to 29. This rapid growth suggests that more households are under financial strain, leading to higher levels of distressed sales.

Are short sales common in Austin now?

While short sales are up sharply, they remain a small portion of the overall market—72 out of more than 16,800 active listings. They are becoming more visible, but they are not dominating the market the way they did during the 2008–2011 downturn.​