Is Austin Still a Good Real Estate Investment?

Is Austin Still a Good Real Estate Investment?

Is Austin still a good real estate investment?


Still ranked as the #1 city to live in Texas by US News and World Report, Austin also ranks 13th on the list of fastest-growing places in the US according to a MoneyGeek report, and 6th for number of jobseekers. 

Now the 10th largest city in the country in terms of population, Austin continues to be among the cities primed for real estate investment in 2024

In the Urban Land Institute’s 2024 Emerging Trends report for the US and Canada, Austin remains a highly sought after real estate market, ranking No. 1 for homebuilding prospects and No. 5 in the list of “Markets to Watch.” 

Austin — which has become a magnet for giant tech companies — has become a home to big companies like Tesla, Google, Amazon, and Oracle which have all recently expanded their operations to Austin. This brought a mass exodus from various metros such as the Bay Area.

This surge in real estate demand is a dream come true for investors.


Why Invest in Austin Real Estate?

Austin’s explosive growth is fueled in part by the expansion of tech companies from California to Texas.

With fewer business regulations, lower taxes, and an affordable cost of living, Austin has become the new go-to hub for tech companies.

With the entry of these large companies, tens of thousands of new jobs are being created, bringing in new residents who need a place to live.

WalletHub ranks Austin as one of the fastest-growing cities in the United States. And as tech giants Apple, Samsung, and Tesla move into the city, home values climb. It’s also a promising time to own rental property in Austin. The influx of highly paid tech employees competing for housing will push rental prices up. If you stumble on a good deal, the potential rental income could make Austin the best place to buy a rental property in Texas.

Out of Texas’ big four cities, Austin has seen the most explosive growth in home prices, in recent years. This 2024, CBA Realtors predict a gradual increase in prices, striking a balance that is beneficial for both buyers and sellers. While the rate of appreciation may be more measured compared to the past, this adjustment ensures a sustainable and inclusive real estate market that embraces affordability and value.

Since 1880, Austin’s population has roughly doubled every 20 years. If the trend continues — and by the looks of things, it certainly could — the metro area will balloon to 4.5 million residents by 2040.

So whether you’re investing in Austin real estate for the short game or you’re in it for the long haul, the future is bright.


Austin Real Estate Market Trends

But how does all this Austin real estate buzz play out on paper?

In 2023, the median price for a home in the Austin-Round Rock MSA decreased 10.2% to $450,000, according to the Austin Board of REALTORS® December 2023 and Year-End Central Texas Housing Market Report. 

When compared to the steep 24.2% decline in pending sales in 2022, 2023 saw a slight 3.0% decline to 30,353 sales emphasizing that the Central Texas housing market continues to find its footing despite macroeconomic factors impacting the broader housing market and economy.

“In 2023 the Austin-Round Rock MSA housing market continued its move towards a more sustainable pace,” Kent Redding, 2024 ABoR president, said. “Housing inventory reached the highest level it’s been in more than eight years, and while there was a drop in closed sales and median close price, these were both symptomatic of higher mortgage rates. In the current housing market, prospective homebuyers and sellers should engage the services of an expert REALTOR® who can help navigate the real estate transaction process. Buyers can utilize this favorable market condition to get pre-qualified while sellers can use the time afforded by the balanced market to enhance their property before listing it for sale.” 

In 2023, sales dollar volume in the MSA dropped 17.0% to yield $17,498,390,950 on the Austin-area economy. At the same time, new listings dipped 7.0% ending the year at 42,623 listings.

In the month of December, closed listings across the MSA declined 8.9% to 2,295 year-over-year as sales dollar volume decreased 8.5% to $1,270,818,458. The median sales price dropped 1.4% to $443,753. New listings increased 8.4% to 1,956 listings, active listings ticked up 4.6% to 7,717 listings, and pending sales rose 13.8% in December to 2,082 sales. Last month, homes spent an average of 84 days on the market, 9 more compared to December 2022.

Clare Losey, Ph.D., housing economist for ABoR, identified higher mortgage rates as being the biggest constraint for potential homebuyers in 2023 and underscores the lack of housing accessibility, specifically for first-time homebuyers. “The single biggest factor constraining the Central Texas housing market in 2023 was the gradual rise in mortgage rates, which peaked in late October. This caused sellers, and buyers essentially, to continually readjust to the current rate environment. While we have seen some leveling off in home prices, the Central Texas region still lacks a sufficient inventory of affordable homes for sale, especially those homes priced below $300,000, which is keeping many would-be first-time homebuyers on the sidelines.” 

When looking to 2024, Losey foresees annual trends to be relatively consistent with this year and mentions that current data is favorable compared to pre-pandemic numbers. “Home prices and sales will likely remain essentially flat, to the tune of a 5.0% increase or decrease year over year in 2024. While the market continues to find its footing, it’s noteworthy that total sales dollar volume is up 30.5%, there are 21.9% more active listings and 38.4% more months of inventory today than there were five years ago. Housing demand is still strong and the uptick in the inventory of homes for sale in 2023 has provided more options for repeat buyers.”

If companies, employees, and digital nomads continue flocking to Austin at the current rate, the competition to find housing can continue driving up prices. And while homes may feel overvalued by Texan standards, they could seem like a bargain for some ex-Silicon Valley tech workers.


Best Real Estate Investments?

Westlake, West Lake Hills, Lake Travis, and Barton Creek, Rollingwood, Tarrytown and Lost Creek are all highly desirable areas in the Austin, Texas region, making them potentially good investments for homeowners. Here are a few reasons why they could be attractive areas for real estate investment:

1. Location: These areas are known for their picturesque natural surroundings, including beautiful lakes, rolling hills, and scenic views. Proximity to nature and outdoor recreational activities can make these areas highly sought after.

2. Quality of Life: Residents in these areas often enjoy a high quality of life, with access to top-rated schools, upscale shopping and dining options, and a strong sense of community.

3. Appreciation Potential: Properties in these areas may have strong potential for long-term appreciation due to their desirability and limited inventory.

4. Strong Real Estate Market: Austin's real estate market has been experiencing rapid growth and strong demand in recent years, making it an attractive market for investment.

It's important to note that real estate investment decisions should be based on thorough research and consideration of individual financial circumstances. If you're considering investing in these areas, it may be beneficial to consult with a real estate professional who has expertise in the Austin market to gain a better understanding of the potential investment opportunities.


How Can I Start?

Reach out to Oscar Draguicevich III as their Austin, TX Realtor for investments in Austin, Texas, because of his extensive knowledge of the local real estate market, which allows him to identify lucrative investment opportunities. Additionally, Oscar's personalized approach ensures that each client's unique investment goals are understood and prioritized throughout the process. With his exceptional negotiation skills and dedication to client satisfaction, Oscar consistently delivers successful investment outcomes in the dynamic Austin market.




Source: Long Leaf Lending

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