Are We Back on the Right Real Estate Trajectory in Austin?

Short answer: yes on pricing, no on affordability.

If you zoom out and look at real estate over the last 75 years, home values in the U.S. typically appreciate at about 3–5% annually. There are always spikes and corrections, but over time the market tends to return to that long-term trend line. What we experienced in Austin from 2020 to 2022 was a massive spike, home values jumped 25–30% in a very short period of time, fueled by sub-3% interest rates and a surge in demand.

What followed was inevitable.

As interest rates climbed back up to fight inflation, affordability took a hit. Buyers suddenly had to borrow significantly more money at much higher rates to purchase the same home. That shift led to a market correction starting in late 2022 and into 2023, where prices in many neighborhoods began to come back down—especially in areas that weren’t anchored by strong school zones or long-term demand drivers.

Now here’s where things get interesting.

As of 2026, pricing in Austin has largely corrected back toward that long-term trajectory, but the cost to own a home has not followed. Interest rates are still sitting above 6%, insurance premiums have increased significantly, and property taxes remain high. Even though home prices have softened, monthly payments are still dramatically higher than they were just a few years ago.

A good example is the fixer-upper scenario.

In 2019, you could buy a home in a solid Southwest Austin neighborhood for under $500,000, put around $100K into renovations, and end up with one of the better homes in the area paired with a low interest rate and manageable carrying costs. Today, you can still find similar homes at that price point, but the math has completely changed. Renovation costs have nearly doubled, interest rates are higher, insurance is higher, and taxes have increased. The result? You’re looking at nearly double the monthly payment for a very similar investment.

So where does that leave us?

We’re back on track from a pricing standpoint, but not from an affordability standpoint. That’s why the market feels so strange right now. It’s not broken, it’s just recalibrating. And until interest rates or operating costs come down, buyers will continue to feel that tension between “this price makes sense” and “this payment doesn’t.”