Austin Home Prices REALLY 50% Off According TO NEWSMAX!

by Jeremy & Eileen Knight

Austin’s housing market is always a hot topic, and a recent Newsweek article claimed that home prices have dropped by 50%. But is that really the case? Let’s break down the data, uncover what’s really happening in the Austin market, and separate fact from sensationalized headlines.

The Clickbait Effect: Misleading Headlines in Real Estate

Recently, CNBC reached out to interview me regarding the Newsweek article titled, “Austin Home Prices Drop 50% as Texas Housing Market Cools.” While the segment was postponed, I wanted to take this opportunity to provide my insights and clarify the reality behind these claims.

Clickbait headlines are a common strategy in media, and I understand why publications like Newsweek use them. In real estate, dramatic headlines attract attention, but they don’t always paint an accurate picture. When buyers and sellers see phrases like “50% price drops,” they either panic or expect to find unbelievable deals—neither of which reflect the actual market dynamics.

The 50% Price Drop Claim: What Really Happened?

The article highlighted a specific luxury property at 4408 Longchamp, located in a gated community near a prestigious Austin golf course with boat access to the lake. Here’s what really happened:

The property was purchased in 2018 for well under $2 million.
It was later listed for $4.9 million.
The price was then slashed to $2.1 million—leading to claims of a 50% drop.
However, the home was later relisted at $3.995 million.

This drastic price adjustment was more about initial overpricing rather than a reflection of an overall market collapse. Overpricing is a common issue in the luxury sector, where sellers often list their properties high to leave room for negotiation. When the price is later reduced, it can appear as though values are plummeting, but in reality, it’s just market correction at work.

Understanding Austin’s Housing Market Data

To truly understand what’s happening in Austin, we need to look beyond isolated luxury home price fluctuations and examine broader market trends.

Austin MSA vs. City of Austin

One critical point of confusion is that most reports refer to the Austin Metropolitan Statistical Area (MSA) rather than just the city itself. The Austin MSA consists of five counties, and market trends can vary significantly between them. For example:

Williamson County (including Georgetown) and Liberty Hill currently have excess inventory, leading to price reductions from builders.
Suburbs with increased inventory are seeing prices dip, affecting overall MSA averages.
In contrast, the City of Austin itself has shown price resilience compared to the surrounding areas.

Market Performance: Key Stats You Need to Know

Austin MSA (Year-over-Year Changes):

Home prices: Down 4.7%
Closed sales: Up 1.1%
Pending sales: Down 7%
Average list-to-close price ratio: 92% (meaning homes are selling at around 8% below asking price)

City of Austin (Year-over-Year Changes):

Home prices: Up 4.7%
Closed sales: Down
List-to-close price ratio: 91.5%

What does this tell us? While some areas within the MSA are experiencing price drops due to excess inventory, the City of Austin itself is holding steady and even appreciating in value.

The Impact of Interest Rates on Home Sales

Mortgage rates have been a significant factor in Austin’s housing activity. In November, rates dropped, causing a surge in home purchases. However, by January, rates increased again, leading to a decline in pending sales. As of February 19, 2025, mortgage rates hover around 7.03%.

However, buyers can still secure lower rates through builder incentives and rate buy-down programs, making home purchases more affordable despite high published rates.

Luxury Market Trends: Softening but Not Collapsing

While Austin’s luxury market has softened, it is far from collapsing. The data shows:

Luxury sales (homes $1M+): Up 10% year-over-year.
Austin remains a top market for high-end real estate.

This means that while sellers in the luxury segment may need to price more competitively, demand remains strong.

2025 Market Outlook: A Great Time to Buy?

Many analysts, including those cited in the Newsweek article, predict that 2025 will be the bottoming year for Austin real estate. Here’s why:

Prices are already down 20% from the peak but stabilizing.
Inventory has increased, giving buyers more negotiation power.
The market is expected to see a 1-1.5% price appreciation by the end of 2025.

Who Benefits Most in 2025?

First-time buyers: Homes under $500,000 remain the best deals in Austin.
Luxury buyers: Significant price reductions make high-end properties more attainable.
Investors: Stabilizing home prices and Austin’s continued growth make now a great time to buy before the market rebounds.

Final Thoughts: Separating Hype from Reality

The Austin housing market is not crashing. While certain luxury properties have seen dramatic price cuts, these are largely due to overpricing rather than market failure. Looking at the broader data:

Home prices aren’t down 50%, but they are down 20% from peak levels.
City of Austin home values are actually increasing.
Suburbs with excess inventory are seeing price corrections.

If you’re considering buying in 2025, you could be securing a great deal. And if you need expert guidance, my team at the Knight Group is here to help. Contact us today to navigate the Austin real estate market with confidence!