A whopping 79% of home buyers in this pandemic-era Texas boomtown are now selling at a loss

Homeowners across Austin are learning a brutal lesson about buying at the top of the market. Ryan McPherson bid $20,000 over asking for a four-bedroom home in East Austin back in 2022, paying $615,000 for a house he’s now bracing to sell for as little as $420,000, a roughly 30% loss.“Everybody that I worked with, they kept saying Austin only goes up,” McPherson told Business Insider in an interview. He’s since moved back to Phoenix and is done waiting for a turnaround.“I’m not going to keep trying to wait this out and pray that there’s a turnaround, because it’s not coming right now,” he said.

“I’d rather just stop losing sleep over it.”He’s far from alone.Austin has posted the steepest home price drop of any major US metro over the past four years, with asking prices down nearly 25% since the 2022 peak, according to a Realtor.com analysis. Roughly 79% of homes that sold that year are now worth less than their purchase price.Remote workers fleeing pricier coastal cities flooded into Austin during the pandemic, drawn by lower taxes and cheap housing.

The metro’s population jumped more than 5% between 2020 and 2022, census data shows, making it the fastest growing large city in the country.“Ironically, affordability was the big draw,” Joel Berner, a senior economist at Realtor.com, told BI.Asking prices soared 36% year-over-year by August 2021, and typical homes topped $465,000 by spring 2022, Realtor.com figures show.“Prices were getting totally out of control,” Berner said.Builders piled in, growing Austin’s housing supply by more than 20%, or roughly 211,000 units, between 2020 and 2025, per census estimates.

Then the Fed started hiking rates that March, and buyers vanished just as new construction flooded the market.“Everything was going into multiple offers, and then it really just stopped,” Austin agent Lindsay Neuren said.“That really spooked the market.”Gary Froniewski bought a North Austin condo in 2022 and...