In May, Parcl Labs initiated ratings coverage across 40 national real estate markets assigning a rating of bullish, bearish or neutral for each market based on one year expected price return. While Florida has garnered significant media attention for being a distressed market, Austin presents the most notional downside in terms of price movement over the next year according to our forecast. Austin's housing market remains in bear territory at -23.96% from peak despite +3.95% YTD growth, with severe supply-demand imbalance. Despite this dip, we still expect home prices to decline 16.5% from current levels over the next 12 months. This is the largest expected decline in our coverage universe of 40 real estate markets nationally.

An Over-Served Market

There is a pronounced supply demand imbalance in Austin which we think this is the result of two dynamics. First, Austin was a huge COVID winner, as cost of living and favorable regulations drove migration, particularly amongst many large tech companies that relocated to the city. Prices are still well above pandemic highs at +32.5%, and as such, some sellers are looking to lock-in gains. On the back of this, there was a surge in new construction to capitalize on a relatively deregulated building environment, as well as net new population. The new inventory came online as migration trends have largely normalized - hence the ongoing supply glut.

What do the numbers say?

Austin’s absorption rate—the percentage of available inventory purchased monthly—sits at just 0.216 as of April 2025, approximately half the national rate of 0.423. This metric reveals that only 22% of listed properties sell each month, highlighting acute demand weakness across the metro. The supply-demand gap, measuring the difference between inventory growth and sales activity, has expanded to a record 0.413—a substantial widening to nearly four times last year's level and exceeding the national gap of 0.326. Seller concessions have intensified with 43.3% of listings experiencing price cuts as of May 12, 2025, surpassing the national average of 34% and representing a 22.3% increase from the same period last year. Meanwhile, new listings totaled 6,439 in mid-May, declining at a more modest pace (-4.1%) than the national average (-6.3%), further compounding inventory pressure in a market already challenged by weakened demand.

Seller Sentiment - They’re Stubborn

Last week, we released a new feature on our application called the Motivated Seller Index, which is now available on every market page. In housing right now there are more sellers and fewer buyers and as inventory piles up, seller motivation is the key indicator to watch: Are sellers eager to exit and cutting prices, or are they holding firm.

The Motivated Seller Index scores seller urgency based on four key factors: days on market, number of price cuts, velocity of cuts (days between cuts), and size of cuts. Every individual on-market listing and market receives a daily-updated Motivated Seller score:

• Neutral (0-2.5)

• Stubborn (2.5-5)

• Motivated (5-7.5)

• Distressed (7.5-10)

How does Austin Stack Up? The sellers remain stubborn but are increasingly motivated to get deals cleared. Austin’s net seller motivation score is a 4.3, putting it in the top 20 markets nationally. Note that nearly 45% of listings have price cuts, which partially underpins this seller motivation score.

Note that Pro users can bulk export the full, real-time active inventory at the individual property listing level. Downloads include all active listings (across all motivation levels), property details, and unique investment insights to guide your decisions. Search your market and click download to get started. Subscribe now for instant access.

Not a Fat Pitch Yet - Investors Should Be Patient

Given the supply overhang, we would recommend a patient disposition for investors looking for exposure to the Austin Market. The projected downside and current inventory levels make it a relatively unattractive market to deploy capital. For liquid exposure to this market long or short, visit Parcl.

The most compelling opportunity with respect to our Austin buy-boxes are in the contemporary starter home category, which are yielding 6.6% on a gross basis. That said, there is plentiful starter home inventory available in Florida with higher yields, particularly in Lakeland and Deltona. We outline opportunities in Florida in our recent report, which can be found here.

For those looking to invest in markets with better fundamentals - we would point you towards Buffalo, NY and Columbus, OH. These markets have much more favorable supply/demand dynamics, micro-economic tailwinds and healthy gross yield opportunities. Here is a brief recap of our top 5 most bullish opportunities.

For more insights into the trends, risks, and opportunities in Austin, or in your own market, see the latest data and research on Parcl Labs.