Austin Bucks Nationwide Trend for Starter Homes

Austin is the only city in the country that saw the income needed to buy a starter home drop between July 2023 and July 2024, according to a recent Redfin report, which shows that the Texas capital’s housing market is still tumbling.

In July, the monthly housing payment for the typical U.S. starter home sold that same month was $1,981, up 4.4 percent compared to a year earlier. That means that, as per July data, the average American homebuyer needs to earn roughly $80,000 to be able to afford the median-priced starter home, also up 4.4 percent year-over-year and only $500 below the all-time high reached in October, Redfin wrote.

In all but one of the 50 most populous U.S. metropolitan areas analyzed by the real estate company, buying a starter home was more expensive in July than a year earlier. That exception was Austin, where the income needed to afford a starter home dropped by 2.5 percent year-over-year.

Redfin’s study was based on an analysis of estimated U.S. incomes and median monthly housing payments for starter homes sold in July 2024.

The median sale price of a starter home in Austin was $327,000 in July, according to Redfin, while the median monthly mortgage payment for it was $2,945. The estimated median household income in the city this year is $103,945—higher than the national average.

Redfin estimates that the typical U.S. household earns $83,966 a year. Data from the U.S. Bureau of Labor Statistics show that American workers earned $1,143 per week in the second quarter of the year, which would amount to $59,436 per year.

Austin homebuyers must have an annual income of $117,781 to be able to afford a starter home—slightly more than the average household income in the city.

While it is still quite a hefty sum, that’s 2.5 percent less than Austin homebuyers needed to pay last year for a starter home, “making it the only major metro that saw a decline; that’s because home prices have been falling all year in the Texas capital,” Redfin wrote.

After reaching a peak of $666,839 in May 2022, the median sale price of homes in Austin have been steadily declining year-over-year, with the exception of a small increase in March, according to Redfin historic data. Between November 2022 and March 2024, the median sale price of homes in Austin fell for 15 consecutive months.

In July, the median sale price of a home in the Texas capital was $547,000, down 2.6 percent compared to a year earlier.

These numbers show that Austin’s housing market is still suffering from the post-pandemic hangover. Home prices skyrocketed during the pandemic in Austin, as the city attracted a mass of remote workers with its relatively affordability, vibrant culture, and thriving job market.

However, the end of the pandemic and the rise of mortgage rates have turned the tide on the city, with many remote workers going back to their cities and states. Since then, Austin has seen some of the most dramatic price drops in the country.