Austin, TX Real Estate Market Trends & Analysis [Updated 2020]

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The Austin real estate market has become one of the most active real estate markets in all of Texas, if not the entire country. With a burgeoning technology industry, relatively low housing prices (at least compared to many coastal cities), and plenty of demand, real estate in Austin has become a bit of a commodity. The culmination of several indicators, in fact, have made Austin more desirable to prospective homeowners than ever before. Meanwhile, amidst all the positive news, more and more neighborhoods in the Austin real estate market are shifting in favor of buyers, which bodes incredibly well for local investors. Despite the economic turmoil resulting from the spread of the Coronavirus, the market still boasts very attractive long-term prospects. While home prices are now being forecasted to dip slightly in 2020, there’s a good chance appreciation rates will return to what real estate investors in Austin have grown accustomed to in recent history. Despite the new market environment, real estate in Austin still has plenty of potential, which begs the question: Is Austin a good place to invest in real estate?

Austin Real Estate Market 2020 Overview

  • Median Home Value: $401,999

  • 1-Year Appreciation Rate: +5.4%

  • Median Home Value (1-Year Forecast): +0.8%

  • Average Days On Market (Zillow): 52

  • Median Rent Price: $1,750

  • Price-To-Rent Ratio: 19.14

  • Austin-Round Rock Unemployment Rate: 2.6% (latest estimate by the Bureau Of Labor Statistics)

  • Population: 964,254 (latest estimate by the U.S. Census Bureau)

  • Median Household Income: $67,462 (latest estimate by the U.S. Census Bureau)

  • Percentage Of Vacant Homes: 8.38%

  • Foreclosure Rate: 1 in every 7,411 (1.3%)


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Austin real estate investing

2020 Austin Real Estate Investing

With median home values up approximately 5.4% in the last year, and expected to reach as high as $405,000 by the end of 2020, Austin remains incredibly attractive to local real estate investors. Despite the latest bout of appreciation, which has seen home prices increase 62.0% from their pre-recession peaks, investors are still coming out in droves to participate in the market.

The Austin real estate investing community is the beneficiary of increasing demand from first-time buyers. Due, in large part, to the city’s growing technology industry and increasing job opportunities, millennials have made Austin a priority for their home buying efforts. Consequently, Austin is doing its best to attract new homeowners. According to a study released by Trulia, more than half of the neighborhoods in the Austin housing market have shifted in favor of buyers in the last year. There’s no doubt about it: more and more people are hoping to call Austin home than ever before, but what does that mean for investors? What can the Austin real estate investing community do with the current market?

The presence of more buyers has increased competition and prices to a point where gross flipping profit margins are starting to grow slim. In fact, supply and demand has shifted the most viable exit strategy for investors to use. While rehabbing and flipping have served investors well over the course of the recovery, it appears today’s market leans more heavily in favor of long-term investors. That’s not to say there aren’t profits to be made flipping houses in Austin (there absolutely are), but rather that today’s economic indicators are more suited for rental property owners.

According to Attom Data Solutions, only Raleigh, NC produced lower returns on qualifying sales in 2019 than the Austin real estate market (13.7%). While it is entirely possible to rehab homes in Austin, profit margins are growing slimmer as the market continues to appreciate. In response, seasoned investors are building their rental portfolios.

With a price-to-rent ratio of 19.14, it is usually more affordable to rent than to buy a house in the Austin real estate market. As a result, it’s safe to assume the rental market will see plenty of demand, which bodes incredibly well for rental property owners. That, along with a median rental price of $1,750, should help investors justify today’s higher acquisition costs. Years of cash flow can help offset some of the highest home values Austin has ever seen.

Is Austin a good place to buy rental property? Again, the Austin real estate market is currently a hotbed for investor activity. Any of today’s most popular exit strategies are in play. However, rapidly increasing home prices, low interest rates, high rental demand, and years of potential appreciation should place buying a rental property at the top of every investor’s list.

2020 Foreclosure Statistics In Austin

The Austin real estate market has spearheaded the latest recovery for the entire state of Texas. Real estate in Austin is one of the biggest reasons Texas has seen such a significant resurgence in its housing sector over the last decade. In doing so, however, homes in Austin have increased almost exponentially in value. Consequently, appreciation rates have detracted from the state’s foreclosure stockpile. Thanks to approximately nine consecutive years of appreciation, in fact, Austin’s foreclosure rate is relatively low. While the whole country currently boasts a foreclosure rate of 3.4% (one in every 2,893), the foreclosure rate in Austin is a very healthy 1.3% (one in every 7411).

Despite having a foreclosure rate that is less than half of the national average, the Austin housing market has seen an increase in foreclosure as of late. As recently as February, for example, “the number of properties that received a foreclosure filing in Austin, TX was 59% higher than the previous month and 40% higher than the same time last year,” according to RealtyTrac. In that same time, RealtyTrac data suggests “the number of properties that received a foreclosure filing in the U.S. was 2% lower than the previous month and 12% lower than the same time last year.”

The Austin real estate market has seen its foreclosure rate rise faster than the national average in recent history. The difference may be primarily attributed to the city’s auction inventory. Up 121.1% from the previous month and 35.5% from the previous year, Austin’s auction inventory now makes up 71.2% of the city’s distressed homes. As a result, real estate investors in Austin should prioritize visiting local auction sites. Doing so may place the odds of securing a deal below market value in their favor. At the very least, tapping the source with the highest percentage of distressed homes should award investors with more viable opportunities.

Outside of the city’s auction inventory, bank-owned homes make up the second largest distribution of distressed homes. According to RealtyTrac, 28.8% of Austin’s distressed property market is currently in the possession of loan originators and banking institutions. Nonetheless, these financial businesses may be willing to part ways with properties at the right prices, which may often be lower than market value. Real estate investors in Austin who are prepared to deal with financial institutions may be able to find their next deal by simply talking to their local bank.

The distribution of distressed homes in the Austin real estate market have slowly been increasing for the better part of a year, but the introduction of the Coronavirus could increase the number of foreclosures sooner rather than later. While mortgage forbearance programs are expected to keep distressed homeowners in their homes for the foreseeable future, mortgage payments will be expected to be made current at some point. When that happens, the Austin housing market may seen an influx of foreclosure filings. As a result, the Austin real estate investing community could see more foreclosures enter the market by the end of 2020 than in recent years. Now may be a great time to line up financing and start scouting pre-foreclosures in and around the city.

2020 Median Home Prices In Austin

Not unlike most markets across the country, Austin real estate bottomed out around the first quarter of 2012. At the time (January 2012), the median Austin home value reached as low as $225,000. It was also at that time, however, that real estate in Austin would start to appreciate at a historic pace. Due largely to a strengthening economy, increasing optimism, and a lack of available inventory, home prices have increased for the better part of a decade. In the time Austin real estate bottomed out to today, the city’s median home value has appreciated 79.4%. After eight consecutive years of appreciation, the median home value in Austin is now $401,999.

Dating back even further (to the turn of the century), here’s a list of the neighborhoods in Austin that have appreciated the most (according to NeighborhoodScout):

  • Huston-Tillotson U / E 11Th St

  • Govalle Ave / Webberville Rd

  • Nile St / N Pleasant Valley Rd

  • Pershing

  • S Pleasant Valley Rd / S Lakeshore Blvd

  • E Riverside Dr / Montopolis Dr

  • E Cesar Chavez St / 1st St E

  • E Martin Luther King Jr Blvd / Poquito St

  • E 12Th St / Chicon St

  • Rogge Ln / Wellington Dr

Whether or not these are the best neighborhoods in Austin to invest in remains to be seen, but there is no denying the progress they have made in a relatively short period of time.

It is worth noting, however, that price forecasts have been adjusted in lieu of the recent Coronavirus outbreak. While many industry experts and pundits had predicted homes in the Austin real estate market would increase by as much as 4.0% over the course of 2020, expectations have been tempered. Instead, more conservative expectations now place the city’s median home value to increase a more modest 0.8% over the next 12 months. Median home values are still expected to rise, but at a slower pace.

Austin Real Estate Market: 2019 Summary

  • Median Home Value: $368,600

  • 1-Year Appreciation Rate: +6.5%

  • Median Home Value (1-Year Forecast): +3.4%

  • Median Rent Price: $1,700

  • Average Days On Market (Zillow): 49

Austin Real Estate Investing 2019

According to Austin real estate news, median home values in the Austin real estate market appreciated at a faster rate than the national average at the time (March 2018 through April 2019), 6.5% and 6.1% respectively. After a year of higher-than-average increases, the median home value in the Austin housing market sat comfortably at $368,600. Despite increases, however, prices were still expected to grow at a fast rate. According to Zillow, prices were expected to increase by as much as 3.4% in one year’s time, which served as a testament to the city’s potential.

With median home values up approximately 6.5% from the previous year, and expected to reach as high as $381,000 by 2020, Austin’s expected appreciation rate was actually underplayed. Due, in large part, to the city’s growing technology industry and increasing job opportunities, millennials have made Austin a popular destination for first-time homebuyers, which drove prices up faster than expected. Meanwhile, price increases haven’t scared anyone away, as buyers continue to show up in droves to this day.

The Austin real estate market, not unlike the majority of markets across the country, saw its lack of available inventory drive up prices in 2019. However, real estate in Austin remained in high demand. Thanks, in large part, to a thriving economy and booming tech industry, demand has yet to taper. As a result, Austin real estate investors can still expect a lot from the local market.

Austin Real Estate Market: 2016 Summary

  • Median Home Price: $289,100

  • 1-Year Appreciation Rate: 6.7%

  • 3-Year Appreciation Rate: 25.2%

  • Unemployment Rate: 3.4%

  • 1-Year Job Growth Rate: 3.9%

  • Population: 885,400

  • Median Household Income: $52,431

Austin Real Estate Investing 2016

Investors and homeowners were treated to a blend of rising home prices, expanding appreciation rates and affordability in the first-half of 2016, as all three outpaced the national average. Home prices were up year-over-year, as appreciation continued its upwards trend. Gains in home prices over the previous three years extended the trend of positive price growth after the recession. For all intents and purposes, Austin real estate news was great for everyone partaking in the market at the time.

The 2016 Austin real estate market was a hotbed for investor activity. Home prices and total equity gains were highly in favor of owners and investors at the time. Total equity gains were far above the national average. The median home price was $289,100 during the second quarter, compared to the national average of $239,167. As a result, total equity gains surpassed the national average for at least seven years.

Positive appreciation trends were thanks to the city’s expanding economy. Along with unemployment improving (lower than the national average at the time), employment rates continued to rise through 2016. Job growth during the second quarter reached 3.9%, compared to the 1.9% exhibited by the rest of the country. Employment held up its end of the deal, and continued its upward trend. As a result, the 2016 Austin real estate market was able to set the foundation for what is one of today’s most attractive markets.

Austin Real Estate Market: 2015 Summary

From a historical perspective, major Texas metros have remained relatively immune to the fluctuations of the economy. While not entirely void of price changes, cities like Austin traditionally remained consistent. However, all of that changed with the onset of the downturn. For the better part of a decade, the Austin real estate market outpaced nearly every major metro across the country, and 2015 was (at the time) the culmination of years of positive growth. For all intents and purposes, Austin became one of the hottest real estate markets in the country five years ago.

The median home price in the area was about $246,000 in 2015. As a comparison, the average home in the United States was priced around $216,567. In the year leading up to 2015, Austin homes appreciated about 9.3%, whereas the national average was just 4.7%.

Austin’s economy, as a whole, was thriving in 2015. At 4.2%, the city’s unemployment rate was well below the national average of 5.9%. As a result, the Austin housing market was able to compound off of previous success, and become what it is today: a powerhouse in the investing world.

Austin County Map:

Map of Austin neighborhoods

The Austin real estate market, not unlike the majority of markets across the country, has seen its lack of available inventory drive up prices in a relatively short period of time. However, real estate in Austin still remains in high demand. Thanks, in large part, to a thriving economy and booming tech industry, demand doesn’t appear as if it will taper off anytime soon. As a result, Austin real estate investors can expect the city to weather the current Coronavirus storm and come out on the other end stronger.

Have you thought about investing in the Austin real estate market? If so, what are you waiting for? We would love to know your thoughts on real estate in Austin in the comments below:

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either expressed or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.
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