Nearly 80% of Austin Homebuyers From 2022 Peak Selling at a Loss

Austin, Texas is experiencing a significant real estate downturn, with approximately 79% of homes sold in 2022 now valued less than their purchase price. Asking prices in the metropolitan area have fallen nearly 25% since their peak in 2022, marking the steepest decline among major U.S. cities.

This sharp reversal comes after a period of rapid growth during the pandemic, fueled by remote workers seeking more affordable housing and lower taxes compared to coastal cities. Austin's population surged by over 5% between 2020 and 2022, becoming the nation's fastest-growing large city. Asking prices reflected this demand, soaring 36% year-over-year by August 2021, with typical homes reaching over $465,000 by spring 2022.

The surge in demand prompted a significant increase in housing supply. Builders added more than 20% to Austin's housing stock, approximately 211,000 units, between 2020 and 2025. However, the Federal Reserve's interest rate hikes beginning in March 2022 led to a sudden drop in buyer activity just as new construction entered the market.

Homeowners who bought at the market's peak are now facing substantial losses. Ryan McPherson, who purchased a four-bedroom home in East Austin for $615,000 in 2022, expects to sell it for as little as $420,000, a potential 30% loss. "Everybody that I worked with, they kept saying Austin only goes up," McPherson told Business Insider. Having moved back to Phoenix, he is now prioritizing selling rather than waiting for a market recovery.

Local real estate agents report a drastic shift from the intense bidding wars of 2022 to a market where sellers are now accepting offers below their purchase price to facilitate sales. Some agents have assisted clients in Buda in selling homes for $30,000 less than they originally paid. Gary Froniewski, who bought a North Austin condo in 2022, estimates its value has dropped by as much as half.

With rents also softening, some owners are exploring options beyond selling at a loss, such as listing their properties for both sale and rent simultaneously. McPherson attempted this strategy in 2025, renting his home for $2,500 per month against a $4,000 mortgage payment, which provided temporary relief but did not resolve the underlying financial issue.

Despite the current challenges, some data suggests potential for a future rebound. Pending sales in Austin rose 11% year-over-year in June, and price cuts are becoming less frequent. Experts note that long-term market fundamentals remain strong, indicating the possibility of a comeback. However, for many homeowners who bought at the 2022 peak, the current market conditions represent a significant financial setback. As one agent noted, "They're kind of screwed," when circumstances force them to sell. For others, like Froniewski, the timing of their purchase stings, admitting, "If I had to sell the house today, I would be in shambles."