Why Homebuyers Are Leaving Austin: Affordability and Migration Trends

For the first time since records began in 2017, more homebuyers looked to leave Austin, Texas, than move in during the third quarter of 2023. This marks a dramatic shift for a city that was the nation's top migration destination just two years ago. Driven by soaring housing costs, elevated mortgage rates, and changing work arrangements, this reversal offers a window into broader national trends, where affordability is the primary driver for relocation. Popular new destinations include Sacramento, Las Vegas, and Orlando, which offer lower price points despite increasing climate risks.

What Caused the Shift Away from Austin?

Austin's real estate market experienced an unprecedented boom during the pandemic, fueled by the rise of remote work and record-low interest rates. However, this popularity came at a cost. By mid-2022, the city's median home price had surged over 75% from pre-pandemic levels. Although prices have since declined from that peak, they remain significantly higher than in 2019. The affordability gap that once attracted buyers from expensive coastal cities like San Francisco and Los Angeles has narrowed considerably.

The combination of high prices and rising interest rates has drastically increased monthly housing payments. Based on our experience assessment, the typical monthly mortgage payment for Austin's median-priced home of $455,000 at a recent average rate of 7.63% is approximately $3,890. This is nearly double the typical payment of $2,136 in 2019, when the median price was $320,000 and the average mortgage rate was 3.94%. This payment shock has priced out many prospective buyers.

Where Are Former Austin Residents Moving?

Data shows that homebuyers leaving Austin are most frequently relocating to other parts of Texas. San Antonio and Corpus Christi are among the top three destinations, alongside Denver, Colorado. This intra-state movement suggests that many are still seeking the Texas lifestyle but at a more accessible price point. The search for affordability is a consistent theme driving migration patterns across the United States.

What Are the Nationwide Migration Trends?

This trend is part of a larger national movement. In the third quarter of 2023, 25.9% of U.S. homebuyers searched for homes in a different metro area, a figure that remains near record highs. While the overall number of home searchers has decreased, the proportion looking to relocate is holding strong. The primary motivation is affordability, with nine of the ten most popular migration destinations having a lower median sale price than the metros buyers are leaving.

The most popular destinations based on net inflow—a metric measuring how many more people are looking to move into an area than leave—are Sacramento, California; Las Vegas, Nevada; and Orlando, Florida. Notably, half of the top ten destinations are in Florida. However, this pursuit of affordability often comes with a trade-off: many of these areas face significant climate risks, such as extreme heat in Sacramento or hurricane risk in Orlando.

What Does This Mean for Buyers in Austin?

For local buyers who remain in Austin, the cooling migration trend has created new opportunities. The city's median home price has fallen approximately 5% year-over-year, the largest decline in the nation. With less competition from out-of-town buyers, those in the market may find more room for negotiation and fewer bidding wars. While high mortgage rates are a challenge, waiting for rates to drop could lead to a resurgence in competition and rapidly escalating prices.

In conclusion, the key takeaway for buyers is to carefully weigh affordability against potential future market shifts. The current environment in Austin may present a chance to purchase a home with less pressure. For those considering a move, researching the balance between cost of living and climate-related risks in emerging hotspot cities is an essential first step.