Back in 2022, we published a post arguing that the housing market was not in a bubble. We leaned on expert surveys, lending data, and supply fundamentals to make the case. Looking back now with a few years of hindsight, we think it's worth revisiting that call honestly — because we were right about some things, and we were wrong about others. And both lessons matter for anyone buying or selling today.
No mass crash. No wave of foreclosures. The fundamentals we cited — sound lending, creditworthy borrowers — held. This was not 2008.
Prices didn't hold. Austin corrected sharply — one of the steepest drops in the country. The crash was in values, not in the financial system.
The distinction matters. A bubble, in the traditional sense, ends in collapse — widespread foreclosures, destroyed equity, systemic damage. That didn't happen. But for buyers who purchased at peak in 2021 or early 2022, the price correction that followed was very real, and we didn't adequately account for how far values could fall even in a fundamentally sound market.
The Record What Actually Happened in Austin
Austin's median home price peaked at roughly $550,000 in May 2022 — a 69% increase from April 2020 in just two years, driven by a tidal wave of remote-work migration, ultra-low mortgage rates, and speculative investor activity. When the Fed raised rates aggressively, that wave reversed quickly.
Median prices surge from ~$369K to ~$550K. Austin becomes one of the hottest markets in the country, attracting out-of-state buyers and investors at historic rates.
The Fed raises rates. Mortgage costs spike. Migration slows. Austin home prices fall 10% in just nine months — ten times the national rate of decline — the steepest drop of any major U.S. city.
Builders deliver thousands of new homes into a softening market. Inventory reaches record highs. Prices continue declining. By 2025, the median sits around $440–450K — roughly 18–20% below peak.
The correction appears to be maturing. Price declines have slowed. Austin's economy remains strong. But the market is still absorbing excess inventory, and a full recovery to 2022 peak prices isn't expected until the late 2020s.
What We Got Right The Fundamentals Held
The two pillars of our original argument — low inventory driving prices and sound lending standards — proved durable. There was no foreclosure crisis. Borrowers who took out mortgages in 2020 and 2021 were creditworthy, and the vast majority kept their homes even as values fell. The financial system didn't crack.
Austin's 18–20% correction, while painful for recent buyers, is nowhere near the 50–60% collapses seen in Las Vegas, Phoenix, and Miami after 2008. The absence of predatory lending meant the market could correct without cascading into systemic failure. That's an important distinction — and it's exactly what we said would happen.
The correction has come for Austin sooner and more significantly than the national housing market.
— Joel Berner, Senior Economist, Realtor.comWhat We Missed "Not a Bubble" Doesn't Mean Prices Are Safe
Here's what we underweighted: you don't need a classic bubble to see a serious price correction. What happened in Austin was a confluence of factors that we — and most analysts — didn't fully account for in 2022.
Mortgage rates rose faster than almost anyone predicted, effectively pricing out a massive share of buyers overnight. At the same time, Austin's pandemic-era demand was unusually fragile — heavily dependent on remote work migration that reversed when return-to-office mandates took hold. And builders, having ramped up during the boom, kept delivering new homes into a market that no longer had the buyers to absorb them.
The result: prices that were "supported by fundamentals" still fell nearly 20% over three years. For a buyer who purchased at peak with 10% down, that correction erased their equity entirely. The lending standards that protected the financial system did not protect those individual buyers from significant paper losses.
The Part We Didn't Name Austin's Housing Market Was Also a Tech Employment Bet
In 2022, we framed the market almost entirely through a real estate lens — supply, demand, lending standards. What we didn't weigh heavily enough was the degree to which Austin's housing prices had become a proxy for a specific bet on tech employment continuing to expand at pandemic-era rates.
Between 2020 and 2022, Austin became a destination of choice for tech companies and their employees. Tesla relocated its headquarters and opened Gigafactory Texas, bringing tens of thousands of jobs. Google, Apple, Amazon, Meta, and Oracle all expanded their Austin footprints significantly. By 2021, high-tech jobs accounted for 11.1% of Austin employment — nearly three times the national share. Remote workers from San Francisco and New York were arriving monthly, buying homes with Bay Area salaries in a Texas market. Prices responded accordingly.
Then the cycle reversed — fast. Through 2022 and 2023, Google, Microsoft, Amazon, Meta, and Twitter all announced significant layoffs, and all five had direct ties to Central Texas. Return-to-office mandates pulled remote workers back to their original cities. The migration tailwind that had driven Austin's boom became a headwind almost overnight.
Housing demand in tech-heavy metros is expected to be lower in the near-term. In some cases, prospective homebuyers will lack both the financial ability to purchase a home and the consumer confidence needed to go through with the purchase.
— Ali Wolf, Chief Economist, ZondaThe honest lesson here is that Austin's housing market in 2021–2022 wasn't just priced on real estate fundamentals. It was priced on an assumption that the tech hiring environment was the new normal. When that assumption broke — through layoffs, rising rates, and the end of remote-work migration — the housing market had to reprice for a different reality. Standard real estate analysis didn't capture that risk, and neither did we.
"No bubble" is not the same as "prices will hold." A market can be fundamentally sound and still correct significantly if the macro environment shifts. In Austin's case, the trigger was rising rates combined with the end of pandemic-era migration — neither of which was visible in the lending data we were citing.
If you're buying today, you're entering a market that has already corrected 18–20% from its peak, with inventory at record highs and seller leverage at record lows. The risk profile is very different from 2022. That's not a prediction — it's context. And context is exactly what we owe you.
If you're selling today, the market has shifted and pricing to the current reality — not to 2022 — is the difference between a successful transaction and a listing that sits.
We were right that 2022 wasn't 2008. We were wrong that being right about that meant prices were safe. The market proved that both things can be true at once — and that's the most useful thing we can share with you heading into 2026. We're always happy to talk through what this means for your specific situation in Austin.
