Is Austin Real Estate Undervalued Right Now?

By Albina Rippy, CPA, The Council Real Estate Group at Compass With Holly McCormick and Natasha Antonioni Last updated: July 29, 2026

The short answer: The question can’t be answered at the metro level, because “Austin real estate” is not one asset. As of late July 2026, the Austin-area median sold price sits around $445,000 — roughly 19% below the May 2022 peak — with 6.0 months of inventory, 68 average days on market, and more than half of active listings having taken a price cut. In the same market, homes above $1 million recorded 333 sales in June, up 31.6% year over year, at a median of 27 days on market. Those two datasets describe different asset classes responding to different forces. The correction was overwhelmingly a supply event, and the supply arrived in places that are not Westlake.

Key Takeaways

• The metro correction is real. Median sold price is down roughly 19% from the May 2022 peak, and about 55% of active listings have taken a price reduction.
• It was caused by supply, not by demand collapse. More than 30,000 apartment units delivered in a single year, pushing vacancy toward 13.8% and rents down about 6%.
• That supply did not arrive in Eanes ISD. There is no meaningful developable land left in 78746, and municipal deed restrictions prevent density.
• “Undervalued” needs a definition. Compared to a 2022 price is not a valuation framework. This article uses three that are: replacement cost, income yield, and carrying cost.
• On yield, Austin is not cheap. The metro rent-to-price ratio sits around 0.37% — well under the 1% rule investors use as a screen. At the luxury end it’s worse. A Westlake home is not a yield asset and shouldn’t be evaluated as one.
• Carrying cost is where the real math lives. With 30-year jumbo rates near 6.9%, property taxes, and rising Hill Country insurance, the annual cost of ownership matters more to your outcome than the purchase price does.

The Framing Problem

Almost every article on this question compares today’s price to a previous price and calls the difference “value.”

That isn’t valuation. An asset is undervalued when its price sits below what it’s worth by some independent measure — what it would cost to rebuild, what income it produces, or what it’s worth to you to use it. A price that’s lower than it was three years ago might be a bargain, or it might be a correctly repriced asset that was overvalued before, or it might still be falling. Price history alone cannot tell you which.

So let’s define terms and then do the work.

Where the Metro Actually Stands

Current as of late July 2026. These numbers move; check the date at the top of this article.

Source: Team Price Real Estate Austin market update, July 23, 2026, Unlock MLS data.

Statewide context matters too. The Texas Real Estate Research Center at Texas A&M reported in July 2026 that Texas inventory sits at 5.3 months and, notably, fell slightly below year-ago levels for the first time in the current cycle — the first tentative sign that the supply-demand imbalance has stopped worsening. Austin has led Texas metros in sales growth even while carrying the state’s most pronounced price correction, and the pace of that correction is moderating.

Read together: a market that overshot, corrected, and is now finding a floor. Not a collapse, and not a recovery yet either.

Now the Number Nobody Puts Next to It

Here is the same market, filtered to homes above $1 million:

Source: Eleven Oaks Realty, June 2026 Austin Luxury Price Report, Travis/Williamson/Hays Counties.

Metro: 68 days on market, 55% of listings cut. Luxury: 27 days, volume up nearly a third.

This is the single most important fact in the Austin market right now and it is almost entirely absent from national coverage. When a buyer in Los Angeles reads that “Austin is down 19%” and concludes they should wait for a better entry into Westlake, they are applying a data point from a market they are not participating in.

What Actually Caused the Correction

Understanding the mechanism tells you whether it will reach your asset.

It was a supply event, concentrated in rental and entry-level housing. More than 30,000 new apartment units delivered in Austin over a single year — a wave that Texas A&M research identified as among the most oversupplied apartment markets in the nation, alongside Phoenix and Nashville. Vacancy climbed toward 13.8%, a multi-year high. Median asking rents fell roughly 6% year over year, with landlords deploying concessions like two months free to hold occupancy.

Single-family construction followed the same pattern. Roughly 4,170 new-construction homes sit in current active inventory against about 13,349 resale homes, with the heaviest new supply in Williamson and Hays counties — Georgetown, Leander, Liberty Hill, Hutto.

And the wave is receding. Deliveries are projected to fall from roughly 21,500 units in 2025 to 12,000–13,000 in 2026, as construction starts collapsed in 2024 under higher rates and compressed development economics.

Now ask the question that matters: how much of that 30,000-unit apartment wave landed inside Eanes ISD?

None of it. There is no meaningful developable land left in 78746. West Lake Hills and Rollingwood are incorporated cities with deed restrictions specifically designed to prevent density. The supply mechanism that repriced the Austin metro is structurally incapable of operating in the Westlake market.

That doesn’t make Westlake immune to anything. It makes it a different asset with a different risk profile — which is the entire point.

→ Related: Westlake Austin Complete Guide · Market Reports

Three Ways to Actually Measure Value

This is the section the other articles skip.

1. Replacement cost

What would it cost to rebuild this house, today, on this land?

For most of the Austin metro, land is a modest share of total value and construction costs are knowable. When a home trades meaningfully below replacement cost, that’s a real signal of undervaluation — you’re buying the structure below what it would cost to create.

In Westlake this framework mostly breaks, and the reason is instructive. On a $3 million Westlake property, a large share of the value is the land — the ridge, the elevation, the canopy, the Eanes zoning attached to the parcel. You cannot replace it at any price, because there is no more of it. Construction costs tell you what the house cost. They tell you almost nothing about what the parcel is worth.

Practical takeaway: in Westlake, ask what fraction of the price is land. On a teardown-adjacent property with a dated structure, you’re buying land plus a liability. On a recently built home, you’re buying land plus a depreciating asset at replacement cost or above. Those are very different purchases at the same price, and the distinction is invisible in any median.

2. Income yield

The investor’s framework: what does the property produce relative to what it costs?

Austin metro does not screen well here. The rent-to-price ratio sits around 0.37%, well below the 1% rule investors use as a first-pass filter — roughly $367 in monthly gross rent per $100,000 of purchase price. The gross rent multiplier is around 22.7x. Cap rates in the metro generally run in the low-to-mid single digits. And that’s before the recent rent softening, which compressed yields further.

At the luxury end it gets worse, not better. Rent-to-price ratios decline as price rises almost everywhere, and Westlake is no exception. A $3 million Westlake home will not produce a rental yield that any investor would accept.

So here is the honest statement, and we’d rather say it plainly than let you discover it later: a luxury Westlake home is not an income asset. It is a consumption good with an embedded appreciation option and meaningful tax characteristics. Buying one because you expect it to perform like an investment is a category error. Buying one because you want to live in it, and want the appreciation profile of a supply-constrained asset alongside that, is entirely rational.

If your goal is cash flow, the honest advice is that Westlake is the wrong market and possibly Austin is the wrong metro. We’d rather tell you that than take you on as a client for a transaction that won’t serve you.

3. Carrying cost — the framework that actually applies

This is where a Westlake buyer should spend their analysis.

For an owner-occupant, “value” is the total annual cost of controlling the asset versus what that housing is worth to you and what the alternative costs.

The components, as of late July 2026:

• Financing. The 30-year fixed jumbo average has run in the high-6% range recently — roughly $657 per month in principal and interest per $100,000 borrowed at 6.88%. Freddie Mac’s 30-year conforming average was 6.58% for the week ending July 23, its highest since August 2025. Rates have been volatile; the Fed has held the target range at 3.50%–3.75% through 2026 after cuts in late 2025.
• Property tax. Effective rates in 78746 vary by jurisdiction — West Lake Hills levies its own municipal rate on top of Travis County, Eanes ISD, and special districts. Published figures for the ZIP range widely depending on methodology, so model your specific address with the Travis Central Appraisal District rather than a blended average.
• The 2026 homestead relief. Texas Proposition 13, approved November 2025, raised the school-district homestead exemption from $100,000 to $140,000, with an additional $60,000 for homeowners 65 or older or disabled. Filing also activates the 10% annual cap on appraised-value increases, which over a long hold in an appreciating market often outweighs the exemption itself.
• Insurance. This is the line item that has moved most and gets the least attention. Hill Country wildfire risk has reshaped the underwriting environment. Get a real quote on a specific address before you’re under contract, not after.

Run the full number. A purchase price that looks like a discount can carry like a premium once taxes, jumbo financing, and insurance are stacked. The reverse is also true. Price is the number in the headline; carry is the number you actually live with.

We build this comparison for clients before they tour. Ask us for it.

→ Related: Relocation Guide

What Would Have to Be True for Westlake to Be Undervalued

Rather than assert a conclusion, here are the falsifiable conditions. Judge them yourself.

The case that it is undervalued rests on:

1. Supply in Eanes ISD is effectively fixed and cannot expand — verifiably true.
2. Eanes remains one of Texas’s top-performing districts, sustaining demand — currently true, verify the TEA rating.
3. Austin’s employment base holds, with diversification into semiconductors, advanced manufacturing, and biotech reducing single-industry risk.
4. The metro’s supply wave is receding, with deliveries projected to fall sharply through 2026–2027.
5. Migration into Texas continues, with California remaining the largest single source.
6. The luxury segment has already demonstrated it moves independently of the metro correction — see the 31.6% volume increase against a flat median.

The case that it is not — and you should sit with this honestly:

1. Yields don’t support the price on any income basis, so the thesis rests entirely on appreciation and use value.
2. Carrying costs have risen materially: high-6% jumbo rates, elevated property taxes, and insurance that has repriced.
3. Affordability constraints across the metro can eventually reach the top of the market through the move-up chain.
4. Luxury is thin and illiquid. Above $5 million the buyer pool is small; a market can be structurally sound and still take a year to sell your specific house.
5. Concentration risk hasn’t disappeared. Diversification is real but Austin is still a technology-weighted economy.
6. Some analysts see a prolonged plateau with low-single-digit appreciation rather than a recovery — which is a perfectly reasonable base case.

Our honest read: Westlake looks fairly valued to modestly undervalued for a long-hold owner-occupant who wants the asset for its own sake and treats appreciation as an option rather than a plan. It does not look undervalued for anyone needing yield, leverage, or a short holding period. We are not going to give you a price target, because anyone who does is guessing.

By Buyer Type

Relocating owner-occupant, 10+ year horizon. The strongest case. You’re buying fixed supply in a top district, and the carrying-cost math improves materially if you can refinance in a lower-rate environment later. Model taxes and insurance at your purchase price, file homestead immediately after closing.

Move-up buyer already in Austin. Often the best relative position in this market. You’re selling into a softer segment and buying into a firmer one, which sounds bad but frequently isn’t — the spread between what you give up and what you gain is usually more favorable than either number alone suggests. Run both sides together, never separately.

Investor seeking cash flow. Austin metro screens poorly and Westlake screens worse. Look at Houston or San Antonio, or look at Austin differently — value-add, below-median acquisition, or the recovering multifamily cycle as deliveries fall. We’re not the right team for that trade and we’ll tell you so.

Seller. Your outcome depends far more on which price tier you sit in and how accurately you price the first fourteen days than on the macro. Homes needing a reduction before going under contract have been averaging roughly 8% off the adjusted price.

Someone waiting for a better entry. The reasonable version of this position is waiting for rates, not prices — a rate move changes your carry more than a plausible price move changes your basis. The risk is that Eanes inventory is thin, and the specific house you want may not be available on your timeline. That’s not a scare tactic; it’s the actual constraint in a fixed-supply market.

What We Won’t Tell You

We won’t tell you prices will rise. We won’t give you a target. We won’t tell you this is a moment that won’t come again — inventory sits at six months metro-wide and buyers have real negotiating room, which is the opposite of urgency.

What we will do is show you the specific numbers for the specific house, model the full carry, and tell you plainly when a purchase doesn’t make sense. That last part is the service.

→ Run the numbers with us

Frequently Asked Questions

Is Austin real estate undervalued right now? It depends entirely on which Austin. As of late July 2026, the metro median sold price sits around $445,000, roughly 19% below the May 2022 peak, with 6.0 months of inventory and 68 average days on market. In the same market, homes above $1 million posted 333 June sales, up 31.6% year over year, at 27 days on market. The metro correction was driven by a supply wave that did not reach supply-constrained submarkets like the Eanes ISD corridor.

How much have Austin home prices dropped from the peak? The Austin-area median sold price is down approximately 19% from the May 2022 peak as of late July 2026. Different sources report figures between roughly 19% and 25% depending on geography and methodology — city of Austin versus metro, median versus average.

Is the Austin housing market going to crash? Most analysts do not project a crash. The Texas Real Estate Research Center reported in July 2026 that statewide inventory fell slightly below year-ago levels for the first time in the current cycle, suggesting the supply-demand imbalance has stopped worsening. Consensus forecasts point toward a plateau with low-single-digit appreciation rather than further significant decline. No forecast is a guarantee.

Why did Austin home prices fall so much? Primarily supply. More than 30,000 apartment units delivered in a single year, pushing vacancy toward 13.8% and rents down roughly 6%, while single-family construction added heavily in Williamson and Hays counties. Texas A&M research identified Austin as among the nation’s most oversupplied apartment markets. Deliveries are now projected to fall from about 21,500 units in 2025 to 12,000–13,000 in 2026.

What is Austin’s price-to-rent ratio in 2026? Austin’s rent-to-price ratio sits around 0.37%, meaning roughly $367 in monthly gross rent per $100,000 of purchase price — well below the 1% rule investors use as a screening filter. The gross rent multiplier is approximately 22.7x. Cash-flow investing at median prices is difficult in this market, and yields compress further at higher price points.

Are Westlake and Eanes ISD home values falling? The Eanes corridor has not tracked the metro correction. The broader Austin luxury segment saw June 2026 sales volume rise 31.6% year over year with median days on market falling to 27. Because 78746 has essentially no developable land remaining and municipal deed restrictions limit density, the supply mechanism that repriced the metro cannot operate there in the same way.

Should I wait to buy in Austin? That depends on what you’re waiting for. Waiting for rates is a coherent position — financing costs affect your monthly carry more than a plausible price move affects your basis. Waiting for prices in a fixed-supply submarket like Eanes ISD is riskier, because inventory is thin and the specific property you want may not be available later. Model both scenarios with real numbers before deciding.

Is Austin a good real estate investment compared to Dallas or Houston? For cash flow, Houston and San Antonio generally produce better yields at lower entry prices. Austin still commands a premium tied to its employment base and constrained geography, though that premium has compressed. For appreciation-focused, long-hold buyers, Austin’s supply constraints in desirable submarkets remain its strongest argument.

What are the real carrying costs of a Westlake home? Financing at recent 30-year jumbo averages in the high-6% range, property taxes that vary by jurisdiction within 78746, and homeowner’s insurance that has repriced meaningfully due to Hill Country wildfire risk. The 2026 Texas homestead exemption of $140,000 for school-district taxes and the 10% annual appraisal cap partially offset. Model all of it at your specific address before you write an offer.

Is now a good time to sell in Austin? It depends heavily on your price tier. Metro-wide, about 55% of active listings have taken a price reduction and the sold-to-list ratio sits near 97.5%. In the $1M+ segment, volume is up sharply and days on market have fallen. Pricing accuracy in the first two weeks matters more than timing the market — homes requiring a reduction before contract have averaged roughly 8% off the adjusted price.

About The Council Real Estate Group

Albina Rippy, CPA brings the financial lens — valuation, tax modeling, and carrying-cost analysis grounded in an accounting background that is genuinely uncommon in residential brokerage. Holly McCormick brings the negotiation and market lens — two decades in 78746 and street-by-street knowledge of how value actually behaves here. Natasha Antonioni brings the design lens — an interior designer and author of Intentional Design: Design Your Home to Manifest Your Goals and Dreams.

Three specialists at Compass RE Texas, serving Westlake, Cuernavaca, and the Eanes ISD market.

Schedule a consultation · (512) 988-1741 · 2500 Bee Cave Rd, Westlake TX 78746

The Council Real Estate Group at Compass RE Texas. TREC License #0593946. This article is general market information and is not investment, tax, or legal advice. We are licensed real estate professionals, not investment advisors; Albina Rippy’s CPA credential does not constitute the provision of tax advice through this article. Consult your own CPA, tax attorney, and financial advisor regarding your circumstances. Market data changes frequently — figures reflect the “last updated” date above. Sources: Team Price Real Estate/Unlock MLS (July 23, 2026); Texas Real Estate Research Center at Texas A&M, Texas Housing Insight (July 2026); Eleven Oaks Realty June 2026 Austin Luxury Price Report; Freddie Mac; Texas Comptroller of Public Accounts.