Movement toward a more balanced market has been underway since last year with observers crediting broader trends, such as rising interest rates, lasting inflation and more mild job growth, for spurring the changes. Every month in 2023 has seen local homes priced well below 2022 levels and taking longer to sell.
The days of new home listings drawing crowds and selling rapidly are not entirely over, some real estate experts said. Generally, they said buyers now have a better chance to explore their options thanks to narrowing prices and increased availability. Sellers may now need to be more conscious about the quality and cost of their offerings.
“We were all having fun two years ago when everything was very expensive and easy to sell, but we’re getting back to normal, which is just a slower, calm market,” Abode Property Group co-owner Mica Gutierrez said.
Leveling out
After seeing record-setting home pricing and sales activity that peaked throughout the last two years, year-over-year sales figures in 2023 have fallen every month in South Austin and Dripping Springs. At the same time, homes are staying on the market for amounts of time not seen in years, local and federal data shows.
“We are still in the phase of leveling,” real estate agent Olivia Barnard said. “We’re still seeing price reductions on some homes where sellers and agents alike are kind of finding, ‘What is the real value?’”
Analysts view a balanced market—one with equal opportunity for buyers and sellers—as one with five and seven months’ worth of available housing inventory. Southwest Austin and Dripping Springs hadn’t come close to that level in years, and inventory had fallen to single digits.
This spring, local inventory across rose above the three-month mark for the first time in five years, the Austin Board of Realtors reported.
“It’s not necessarily that we’re in a strong buyer’s market—that would be four to six months; we’re not quite there yet,” ABoR President Ashley Jackson said. “But we are in a pretty good balance where a buyer may be able to get something under asking price.”
A similar trend has played out in the area’s relatively limited rental market. Just over half of the housing units in South Central Austin’s Council District 5 are rented, but nearly two-thirds of housing in District 8—covering most of Southwest Austin—is owned, by far the highest share in the city.
Rents are flattening out after extended increases; MRI ApartmentData—which researches and collects data on rental trends—tracked a 33% spike in rents citywide between 2020-22. After years without any slowdown, rents dropped off a bit this year and are holding steady.
Cindi Reed, MRI ApartmentData’s Austin-based director, said benefits to renters may more muted in Southwest Austin as much of the area is still considered a sought-after part of town and home to relatively limited apartment development.
The recent slowdown has also led some to rent out their properties until things pick back up, said Bailey Moran, a manager at Bramlett Residential Real Estate.
“I have had multiple sellers who have decided to just pull out, wait until next year when we get into that spring seasonality and try to sell while they have renters in there for a couple months,” she said.
Measuring up the market
Those changes apply across much of the Austin area, analysts said, although different pockets of the city have their own trends.
Housing price spikes in Central Austin have caused more of a relative affordability crunch there, while rising home values to the southwest remained in range for families or the higher-dollar consumers already interested in the area.
Moran said homes in the $1 million-plus bracket stay on the market longer, especially in Dripping Springs, while those priced at $600,000-$700,000 and below sell much faster.
Farther from Austin city limits, there’s also room for more new homes, real estate agents said. Development continues as federal data shows the Austin-Round Rock-Georgetown area remaining a national leader in housing production as around 32,000-51,000 housing units have been added annually since 2019.
While much of South Austin is built out, Dripping Springs is seeing more new development that, while facing local infrastructure limitations, is still expected to continue, agents said.
“That brings a whole other layer of demand out toward southwest, Dripping Springs,” Moran said.
The outlook
As the market settles in, Jackson said she believes there’s now a general outlook for stability in the southwestern area overall.
Looking ahead, local agents said key factors for any notable movement will be the pace of new development and whether interest rates significantly rise or fall again. For now, they view conditions as likely to remain at least into next year with consideration for traditional seasonal swings.
“We’re still in a good market for both sides,” Gutierrez said. “I think buyers get to be pickier than sellers; they don’t get to have the whole pie.”
Jackson said one of her top takeaways is the local buying opportunity. Barnard agreed, noting while sellers need to be more “realistic” about their outlook, local activity remains in a relatively solid place for both sides.
“If you take Austin compared to a lot of other markets, we’re still doing well,” she said. “People are still buying; people are still selling; people are still moving. It’s just the path to get there is so different than it was 18 months ago.”
