Last updated on February 20th, 2024 at 07:01 am

Quick Answer

No, probably not. In order for a housing market to crash you need to usually have 

  • Forced selling
  • High unemployment 
  • High inventory

Currently that is not the case Austin or anywhere in the country.

Austin, TX had huge price increases in the last few years. 

But did rising interest rates cool off one of the hottest housing markets in the United States? 

And is Austin-Round Rock area headed for a crash of epic proportions?

  • Closed sales are down about 8%
  • Averages days on market has reached 84 days. 
  • Total sales dollar volume is down 8% to 1.27 billion.
  • Housing inventory reached the highest level in that last 8 years
  • In 2023 the median sales price decreased over 10%.

Here’s how a crash unfolds:

  • Home prices plummet: Your dream home might shrink in value by 20% or more, leaving you “underwater” on your mortgage, owing more than it’s worth. Facing potential foreclosure, many are forced to sell, further flooding the market and driving prices down.
  • Investment losses pile up: Real estate investors see their portfolios shrink, impacting their retirement plans and investment strategies. This ripple effect can destabilize financial markets.
  • The economy takes a hit: Consumer confidence plummets along with home values. People pull back on spending, hurting businesses and potentially leading to job losses. Banks tighten lending, further slowing the economy.

Remember the 2008 crash? Millions lost their homes, businesses shut down, and the global economy teetered on the brink. While a similar scenario isn’t guaranteed, understanding the potential consequences is crucial.

Additional facts to consider:

  • The severity of a crash depends on various factors, like the cause, lending regulations, and the overall economy’s health.
  • While crashes are scary, they’re not inevitable. Careful planning and financial literacy can help you navigate challenging times.

Hindsight is 20/20, but learning from past housing market crashes can make the future brighter. Take the 2008 crash. It wasn’t just a housing crisis; it was a financial earthquake that sent shockwaves around the world. Millions lost their homes, banks went bust, and the stock market took a nosedive. It wasn’t just about bricks and mortar – it was about jobs, savings, and dreams shattered.

Why did it happen, and what were the consequences? In simple terms, loose lending practices and risky investments fueled a housing bubble that eventually burst. 

Foreclosures skyrocketed, banks holding bad loans teetered on the brink, and the whole financial system felt the tremors. The impact? A deep recession, widespread unemployment, and years of economic pain.

What always happens before a crash

Let’s discuss what a crash looks like and what most crashes have in common

High Inventory Levels: Think supply and demand. Most housing crashes always have a spike in inventory levels. This is usually because of forced selling. Homeowners literally need to get rid of their homes and are willing to drop the price. 

High unemployment: The reason most home owners need to get rid of their homes is because they have been laid off, fired, or don’t have the income for their mortgage payments.

Lots of foreclosures:  Before and during a crash, there will be a high number of foreclosures. The banks will take back ownership of the houses.

They aren’t in the business of buying and selling homes. They are in the business of making money off mortgages. 

They have arrangements with local brokers and companies and they usually have fire sales. They get rid of the inventory as fast as possible. 

Austin-Round Rock Stats

Hold on, Austin housing market, what’s going on?! Sure, prices are dipping and there are more houses on the market, but that’s just part of the story. Let’s dig deeper.

People, people everywhere! Austin’s booming population, fueled by folks moving in from other states, means more buyers chasing homes. 

This high demand keeps prices afloat, even with the recent decrease. Understanding these demographic shifts helps predict future market trends.

But it’s not just about the crowd, it’s about the jobs too! Tech giants and other companies setting up shop in Austin create job opportunities, attracting even more people. 

This, in turn, fuels demand for housing, impacting prices and market stability. Analyzing economic factors like job growth and industry diversification paints a clearer picture of what’s driving the market.

The bottom line? Austin’s housing market is a complex beast, shaped by various factors beyond just prices and inventory. 

By considering demographics, economic trends, and industry shifts, we gain a deeper understanding of the current market state and can make informed decisions about the future.

Current Austin housing market stats

Homes are getting more affordable: The big news? Median home prices took a dip!

  • The median sales price decreased 1% to $511,250 (Dec 2023).
  • Active listings are up 21%
  • Inventory has increased to 3 months.
  • Sales volume in dollars is down 10%

Many realtors believe that 6 months of inventory represents a market where neither buyers or sellers have an advantage. 

It is still a seller’s market.

This means home prices in Austin have probably reached a pinnacle for now.

But remember, Austin is a big city with diverse neighborhoods: Not all areas are created equal. Some suburbs saw bigger price drops than others, and there’s a lot of variation in terms of available homes and who’s buying them. 

Knowing your specific neighborhood’s trends can make all the difference, whether you’re buying, selling, or just curious.

It’s all about the bigger picture: The housing market doesn’t exist in a vacuum. Jobs, income levels, and the overall economy all play a part. If more people are getting hired in Austin, that means more demand for houses, which can affect prices. 

Understanding these connections helps us predict where the market might be headed.

The bottom line? The numbers behind Austin’s housing market are important, but they’re just one piece of the puzzle. By digging deeper into local trends and the bigger economic picture, you can make smarter decisions about your real estate journey in this dynamic city.

Travis County Market Statistics

The city of Austin is entirely encompassed in Travis County. Lets take a look at the most recent market statistics year over year. 

 
YoY, short for “Year-over-Year,” gauges the growth rate of a particular metric over two comparable periods, like the current and previous periods.
  • The median sales priced increased 2% to $527,500.
  • Averages days on the market increased 80 days. This was a 31% increase compared to 2022.
  • The total months of inventory creeped up to 3.1 months, still indicated its a seller’s market. 
  • New listings increased 8%

Current Foreclosures in Texas

Foreclosures are always a part of any housing crash. 

They add fuel to the fire because the add inventory to the housing market at prices that will be be below market values. 

This is due to forced selling usually because of people losing their jobs.

According to this source, Texas had a total of 7,546 total properties in foreclosure in the 3rd quarter of 2023.

  • Houston, Texas (2,279 foreclosure starts

As scary as it might sound, this isn’t indicative of a upcoming housing crisis.   

Taking a look at the above foreclosure chart, you can see although foreclosures are rising, it isn’t anywhere near the number that occurred during the Great Recession.

The Bottom Line

Although the housing market has slowed in Austin, it is hard to see any type of crash coming in 2024. 

We might see a correction of prices, but until wee see:

  • Sharp Rising Unemployment
  • Forced Selling
  • High Inventory Levels

Many people think that high interest rates can cause a crash. 

That just ins’t true, all it means as that people won’t sell their homes to take on a much higher mortgage payment. 

If you have a house you want to sell in Austin, Texas, contact us for an offer.