Austin, Texas, is losing its appeal among homebuyers.
During the third quarter, more homebuyers looked to leave the Texas capital, once a pandemic hotspot that saw an influx out of-town buyers, than those who wanted to move in, according to data from brokerage Redfin. This marks the first time there hasn't been a net inflow of buyers into the area since Redfin started tracking this data in 2017.
Over the past year, the number of Austin-based Redfin users searching for a new home outside the metro area more than doubled.
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It's an about-face from the early days of the pandemic, when the city saw an influx of out-of-town buyers taking advantage of the work from home policies and record-low mortgage rates. For the first time, buyers were able to seek out more space and more affordable homes with fewer constraints.
Austin's popularity, which began even before the pandemic, surged to such a high degree that it was considered the top U.S. migration destination at the start of 2021, according to Redfin, but now, more buyers are in favor of leaving, given the rise in housing costs and with remote work policies changing once again.
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In mid-2022, home prices in Austin surged more than 75% compared to pre-pandemic times. Although prices have fallen since that peak, homes are still significantly more expensive. In fact, the gap between home prices in expensive metro areas like Los Angles and San Francisco and Austin is even smaller than before.
Mortgage rates are only exacerbating this problem.
With the key U.S. mortgage rate sitting at 7.63%, today’s typical monthly payment for Austin’s median-priced home has nearly doubled.
For a median priced home in the area, about $455,000, the monthly payments are now $3,890. In 2019, homeowners were paying $2,136 for a median sale price of $320,000 with an average mortgage rate of 3.94%.
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Mortgage rates rose past the 6% mark in September 2022 and have remained above that level ever since.
Aside from the costs, Redfin agents reported that some formerly remote workers have moved back to their home city after work-from-home policies reverted. Meanwhile, some others are likely leaving to be closer to major job hubs, according to Redfin.
