The housing crisis is getting worse more quickly in some areas of the US than others, with one major metropolis being named as the first place to see an oncoming crash.
As fears of a recession grow, the once-booming Austin, Texas, is going to be the very first market to hit rock bottom.
That is according to Nick Gerli, CEO of real estate analytics platform Reventure App.
‘The first market to bottom in this housing downturn will be Austin, TX. Prices are already down 20 percent from peak,’ he wrote in a recent post on X.
‘And the market has shifted from being 46 percent overvalued to now only 8 percent overvalued.’
By the end of this year, he added, Austin will be a buyer’s market.
It comes after Gerli said in November last year that Austin had become ‘ground zero’ for the once-booming property market in Texas.
At the time, he said that the value of homes was decreasing due to a surplus in inventory.
Austin experienced a massive real estate boom during the pandemic that is now reversing
In an X post on April 20, Gerli said that Austin has become more ‘fairly valued’ through two mechanisms.
‘First – prices have dropped 20.4 percent from their peak in 2022. Returning affordability,’ he wrote.
‘Second – the median income in the metro has continued rising, and is now up to $102,000, increasing relative affordability.’
He added that Reventure expects prices to continue dropping in the city, estimating a ‘6.3 percent contraction’ over the next year.
Austin experienced a massive real estate boom during the pandemic.
According to the US Census Bureau, from 2000 to 2022, Texas added over 9 million residents, drawn by lower housing costs, job opportunities and no state income tax.
Now, Austin leads Texas in housing inventory oversupply, local realtor Kasey Jorgenson told the Daily Mail, with a 42 percent surplus.
‘We had so many people that we had moving here during the pandemic, and we saw some of the most dramatic increases in sales prices versus the rest of the country,’ he said.
Austin’s sunny climate, expansive state parks and relative affordability attracted an influx of buyers during the pandemic
In part due to thriving tech and music industries in the city and low state taxes, Austin had seen an influx of new residents in recent years – a trend which accelerated during the pandemic
‘Now, the market is behaving the way California, Nevada and Arizona behaved during the recession back in 2008 and 2009,’ said Austin realtor Kasey Jorgenson
Austin experienced a massive real estate boom during the pandemic.
According to the US Census Bureau, from 2000 to 2022, Texas added over 9 million residents, drawn by lower housing costs, job opportunities and no state income tax.
Now, Austin leads Texas in housing inventory oversupply, local realtor Kasey Jorgenson tell DailyMail.com, with a 42 percent surplus.
‘We had so many people that we had moving here during the pandemic, and we saw some of the most dramatic increases in sales prices versus the rest of the country,’ he says.
‘At that time, there were less than 400 homes on the market in all of Austin and we would get 40 to 60 offers on each of those.
‘Now, the market is behaving the way California, Nevada and Arizona behaved during the recession back in 2008 and 2009. We’re getting really close to having a record amount of active listings.’
The reason is two-fold, Jorgenson adds.
Skyrocketing mortgage rates are scaring potential buyers, who are also ‘very picky’ in this uncertain economy and want a turn-key home with no problems.
The population of the wider city of Austin soared from 1.6 million in 2013 to 2.3 million in 2023 (Pictured: Suburb neighborhood of East Austin)
Austin’s popularity sparked a surge in homebuilding, but the inventory is not being met by strong demand, experts say
New construction in the city is also hurting resales of homes.
‘Anybody that’s doing resell isn’t selling if there’s new construction happening in the area,’ he said.
‘They’re having to compete with the builders offering flex credits that they can use toward whatever they want, such as closing costs or new gutters.
‘Let’s say it’s a $500,000 house. They’ll give you a 10 percent flex credit that you put towards closing. Who can compete with that?’
Jorgenson predicts the dip will stretch into 2027, saying it’ll get even worse this year and have a rocky ride all through 2026.
‘We think the soonest we’re going to start seeing any meaningful increase in sales is probably the end of 2026 and moving into 2027. A lot of that is based on interest rates.’
As Austin faces a housing crash, the rest of the US has also seen a slowdown in sales.
Total home sales lowered more than expected in March — dropping to their slowest pace since 2009 as panicked buyers bail on deals.
Sales of existing homes slid 5.9 percent last month from February to an annual rate of 4.02 million, seasonally adjusted, the National Association of Realtors (NAR) reported.
The figures come as a recent report warned that five metro areas — three in Florida and two in Arizona — are at huge risk of also experiencing housing market crash in 2025.
‘Home buying and selling remained sluggish in March due to the affordability challenges associated with high mortgage rates,’ said NAR chief economist Lawrence Yun in a statement.
