Has the Austin housing market crash began?

Question

YouTuber Travis Spencer recently published this video:

Housing Crash definition

In this video, Travis starts off by defining a Housing Crash.Travis defines a housing crash as a 15 percent loss in value since its peak during the same year.

Overvaluation

Travis attributes employment, and institutional real estate investing as the main drivers for Austin's real estate market overvaluation. He explains that a lot of the companies contributing to the rise in job listings are tech companies. Because tech companies are taking a beating in today's market (just like real estate), tech companies will soon begin laying off people. One example of this is Facebook which recently made announcements about laying off 15 percent of its workforce. Unemployment will push more homeowners to sell.

Now in the case of big Institutional Investment companies coming to Austin to invest, as rents rise, many of these investment company-bought homes will need to be sold. This will also fuel the price drop.

Price Drop accelerators:

Travis then focuses on the events that will continue accelerating the price drop of homes in Austin, Texas. Those include: (1) dropping rents, (2) Increasing Inventory, and lastly (3) New builds.

He concludes that Austin has already CRASHED 17 percent since its peak in May 2022.

I have recently been interested in a home in the Highland neighborhood area (just north of North Loop) that was originally priced at $1.2 million in May 2022 (the height of the peak). Now the property is being listed at $599k. This $1.2 million price might have just been a terrible price chosen by the seller's agent given that according to the home's tax records, in 2021, the home was appraised at $478k while in September 2022, it was appraised at $700k.

Any thoughts on this video? What should be the expected price drop percentage (from peak [May 2022]) that we should expect in Austin, TX?

David Ivy · Answer

@Moises Guerra Garcia

Here's a table showing the median sales price of a single-family home in Austin since January 2019:

May 2022 is the highest median sales price in the past 12 months at $730,000. In September 2022, the median price of a single-family home in Austin was down about 17%  at $605,000. So, if you stipulate that by a "housing crash" you mean a 15%+ decrease in median home prices between any two months within a 12 month period, then yes, the Austin market has "crashed" by that very specific definition.

However, I'm not sure of the reasoning behind defining a real estate market crash in that very specific fashion. In the video, he says that a 15% decrease in price is a big drop for someone who just bought a house. Yes, if you're that person who bought the $730k median home in May and needs to sell now for some reason, you're definitely unhappy with how the market has shifted and probably not selling for $730k. However, that's a very specific situation that I don't think captures enough of our common understanding of what might constitute a "real estate market crash."

While the median sales price in Austin was down 17% from May to September this, the following was also true:-The median sales price of a single-family home in Austin was up by 68% last month compared to January 2019.-The median sales price of a single-family home in Austin was up by by 3.4% last month compared to 12 months ago in September 2021.-Compared to January of this year in Austin, the median sales price of a single-family home in September was flat (up ~1%).

When you think of a market that has "crashed," you don't think of facts like those above being true. While the Austin market has shifted and the median sales price of a home is down from earlier this year, we're still very far from even 2020 prices and are still up year-over-year from 2021.

It's one thing to say that the Austin market has crashed, but it's another to say that it is in the process of crashing. I don't think the Austin market has crashed in any common sense understanding of "crashed." However, time will tell if we're currently in the process of crashing. We're definitely trending in that direction since the peak median price in May 2022. However, I think it's much too early to make a call.

Jordan Moorhead · Answer

@Moises Guerra Garcia Youtuber's are not an accurate source of news. You know why they all always say that something bad is going to happen? Because you click and they get paid if you watch their vides because Youtube sells ad space. The Austin market is still strong and we are selling many homes at great prices. Some sellers are greedy and some are scared so you're seeing different results.

Aaron Gordy · Answer

Negative publicity gets eyeballs and then advertising. The guy is not based in reality. His last paragraph suggests that tax appraisals are accurate reflections of the market. Surely he is joking. Lost credibility based upon that paragraph alone.

Ryan Kelly · Answer

@Moises Guerra Garcia when things go down in value, we call it a sale. If you want to be in a hot market, you want to look for opportunities to get in when others sit on their hands. Austin will be one of those markets the next 6-18 months.

Kyle S. · Answer

Redfin has Austin down 15% since May's peak.

Has the Austin housing market crash began?

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