Austin’s hot housing market, which topped a national ranking last year, may be about to cool – and then some.
The Texas capital, ranked No. 1 by Zillow among U.S. markets last year, plunged to No. 10 in the real estate site’s predictions for 2022. The main reason: Austin’s market got so expensive that fewer people can afford to live there.
Prices have been rising for years as home builders failed to keep up with the city’s rapid growth. Then the pandemic hit and the market went into overdrive: Inventory dropped and the new normal meant buyers had to pay tens of thousands over asking prices. While finding affordable homes in Austin has long been a challenge, the past two years have put the task out of reach for many.
It’s a big change from Zillow’s predictions in last year’s list, when it said the top five metropolitan areas were all relatively affordable compared with “expensive coastal areas that have led home appreciation ranks in recent years, providing relative value for those looking to take advantage of low mortgage rates to buy their first home or move up in the market.”
The Sun Belt dominates Zillow’s 2022 list. Tampa leads, and the top 10 are all cities in the south or southwest. Austin shares most of the traits attributed to their rise—some of which are also what put the Texas capital ahead of others in recent years.
They include strong forecasted home value growth, economic fundamentals including high job growth, fast-moving inventory, plentiful potential buyers – and, of course, sunny weather. Another factor was the relatively low impact of rising mortgage interest rates or a slowing stock market.