One of the fastest-growing cities in the United States, Austin, TX offers an exceptional quality of life. This dynamic city is home to gorgeous landscapes, world-class restaurants, exciting entertainment destinations, top-notch schools, and a wide range of gorgeous homes.
Austin also has a very attractive tax structure. Aside from no personal income taxes, residents enjoy low property and corporate taxes. As a tax haven, it entices many of the country’s top earners to move in and invest here. This, in turn, has consistently kept Austin’s luxury real estate market robust and thriving.
Are you considering making the move to Austin or investing in a luxury property in the city? We discuss below why now would be the perfect time to do it.
What Defines a Luxury Home?
“Luxury home” is a term that’s loosely thrown around, making it hard to distinguish what is and what’s not. Contrary to what many think, it’s not just based on how expensive a property is. While price is a significant element, several factors go into determining what makes a luxury property.
Here’s a quick rundown of the common features that define a high end home.
- Prime Location and Generous Square Footage
- Excellent Design and Quality
- Top of the line amenities
One of the main factors that set luxury real estate apart is location. People pay top dollar for homes in exclusive neighborhoods that offer utmost privacy, unbeatable proximity to amenities, or vantage points that you won’t normally get in a standard home. Some of the best – and highest priced – properties in Austin have all these.
A large floor area and lot size also define luxury real estate because it provides freedom. Having an expansive space gives you an endless number of options on how you can use and customize your property over time.
For real estate to be luxurious, it needs to be seen as such. Your home isn’t just a sanctuary, it’s also a personal statement that reflects your taste and lifestyle. The architecture and the interior design should reflect the image you want to show to the world.
That said, distinctive architecture and interiors are not just for appearances alone. They can transform a dull structure into something that doesn’t only look beautiful, but highly functional as well. They’re adapted to the latest safety and aesthetic standards, using materials and build quality meant to last for decades.
A luxurious home has amenities that make life easier and more enjoyable. When thinking about luxury, many conveniences come to mind like beautiful swimming pools, spa-like bathrooms, backyard tennis courts, and decked-out kitchens.
Smart luxury homes are also making big waves. Homebuyers look for these kinds of properties since smart features can make everything more convenient. With a swipe on your phone, you can lock your doors, control the temperature, and check the security cameras, even if you’re on the other side of the country. Builders who keep up with these tech trends are the ones who stay on top of Austin’s real estate market.
How are Ultra-Luxury Homes Different?
While luxury homes in Austin are already very impressive, a different tier of properties holds the top spot for utmost extravagance. Also called trophy homes, ultra-luxury properties are the crème de la crème in terms of price and quality. Here, attention to detail is the name of the game. The finest craftsmanship is applied to the minutest detail. You can expect only the best brands, state of the art appliances, and unparalleled convenience and comfort.
Austin’s Real Estate Market Trends: 2020-2022
Austin has been the country’s poster child when it comes to real estate and population growth during the pandemic. From 2020 to 2022, Texas’s capital has experienced a massive housing price surge. But toward the latter half of 2022, nationwide economic changes forebode a slowdown that experts predict may go on well into 2023 and beyond.
To get a better understanding of present market trends and forecasts, it’s crucial to first take a look at how the market performed in the last two years.
2020: Unprecedented Growth
After the initial impact of the coronavirus pandemic, 2020 turned out to be a great year for Austin’s real estate market. In particular, it was a banner year for sellers. Before this, the state capital has already been attracting new residents, but the pandemic intensified the mass migration. This caused a huge imbalance in the local housing market’s supply and demand.
The combination of strong demand and low inventory caused the house price trend in Austin to skyrocket. By the end of the year, the median home price in the city was $344,000, a 9.2% increase from the prior year. Residential sales also increased by 16.4%. This was a record for the month of December of any year.
2021: Continued Rise in Prices
The trends from 2020 spilled over to Austin’s 2021 real estate market, without showing any signs of stopping. Buyer demand was high while inventory was still low. Builders were having a hard time keeping up since the pandemic delayed most of the projects in the pipeline.
In March, the median sales price was $398,000,23.7% higher compared to the same quarter in 2020. By the end of the last quarter, Austin was the hottest real estate market in the country, with the median price going up to $450,000, way above thestatewide median price of $300,000.
2022: Return to Normalcy
The soaring trends in Austin’s home prices continued into 2022, with the median price going up to as much as $546,000 during the 2nd quarter. This is a17.4% increase compared to the same period the prior year. But what goes up must eventually come down, especially when it comes to real estate.
Austin closed the3rd quarter with a median home price of $492,000. While this was still 6.2% higher compared to the previous year, it was a rather huge drop in just 3 months. In a Realtor.comreport, Austin ranked first in the list of top cities where home prices have been dropping the most.
The downturn was attributed in large part to two main factors: rising mortgage interest rates and relatively high inventory. As expected, higher interest rates have somewhat put the brakes on the home buying frenzy that characterized the last two years. Meanwhile, after a historic inventory low, more builders are now positioned to keep up with the housing demand. And since the competition isn’t as tight anymore, more houses sit on the market longer, helping inventory grow even more.
While the change in market conditions may appear drastic, experts see this as the market correcting itself after the unprecedented growth of the preceding months.
What Will Happen to Austin’s Luxury Real Estate Sector?
The good news is, throughout the rapid shift in Austin’s real estate market trends, the luxury sector fared better than the overall market. According to Realtor.com, the median price for Austin’s most expensive homes increased by 15%, soaring to $1.12 million as of August, 2022. However, in the following month, prices dipped slightly by 4% to just below $1.1 million.
A closer look will reveal that this downward trend is actually no cause for alarm. Due to the high demand, Austin’s luxury properties were some of the most overpriced during the pandemic, but as everything settles back to normal, so do the prices of these upscale homes.
Major price drops are considered unlikely, primarily because the factors that attract people to Austin in the first place remain unchanged. The forecast for Austin’s real estate market shows that demand will only grow in the long run. This means luxury property values are expected to continue appreciating over time.
For the savvy homebuyer, all these developments point to the perfect timing to buy a luxury home in Austin. Although the market is far from being balanced, there’s less competition, allowing buyers and sellers more options and more wiggle room for negotiations.
Why are Many People Moving to Texas?
As they say, everything is bigger in Texas, and recently, this includes the population. During the past few years, droves of people, including high-net-worth individuals, have been moving to the state. It’s estimated that there’s a daily influx of 1000 new people, and it’s easy to see why. There are plenty of things to love about Texas.
- Robust Economy and Strong Job Market
The Lone Star State is diverse, vibrant, and thriving. It’s home to one of the healthiest economies in the country, with major cities like Dallas, Houston, and Austin experiencing outstanding growth. This makes finding employment opportunities in the region easier. Residents will have plenty to choose from since there are 1000 daily jobs added throughout big companies like Tesla and Black and Decker.
- Variety of Destinations and Attractions
The recreational opportunities in Texas are equally impressive. Whether you’re into outdoor adventures or indoor fun, you will never run out of options. If you’re a foodie, you’ll love the Texas food scene. Enjoy a variety of dishes from classic smoked barbeques, and Tex-Mex style burritos to other delicious cuisines from different countries.
- Low Cost of Living and Doing Business:
The cost of living in a high-salary area is often also high, but this doesn’t apply in Texas. In fact, the cost of living here is 8% lower than the national average. Moreover, the state is one of the few that does not collect individual income taxes. Instead, it relies on property and sales taxes for income. This means that your earnings can go further, giving you better chances of enjoying a higher standard of life.
Corporate taxes are also significantly lower here, making it easier to set up shop and conduct your business.
Californians are Moving to Texas
California is one of the richest states in the US and the home of some the biggest tech companies in the world. It’s also culturally diverse and home to many majestic natural attractions including its famous beaches. Despite this, many Californians have been packing up and moving on; and as they move east, Texas seems to be a perfect choice.
The leading factor for this mass exodus is believed to be the high cost of living. A quick glance at the utility bills or gas prices make many people think twice about staying put, especially when there are more affordable options like Texas.
Another reason is high income taxes. California already has some of the highest tax rates in the country, but it seems that they’re about to go higher. High net worth individuals are affected most since there are proposed policies to tax the state’s top earners more.
Companies Moving to Austin
If you’re planning to move your business to another state, what better place to go than the “Best State for Business?” Texas has held this title for seventeen consecutive years. Recently, big companies like Apple, Tesla, Amazon, and AT&T have relocated their base here, particularly in Austin.
This is due to three primary factors: low tax burden, high talent availability, and low cost of living. With this combination, you get the perfect environment for a business to thrive. Since the major cities in Texas, like Austin, have turned into hotbeds for young professionals, companies are assured of a deep pool of talent for their recruitment needs. Meanwhile, the affordability brought about by low taxes and relatively low cost of living make the state desirable for fresh recruits and potential manpower.
Famous People Who’ve Recently Moved to Austin
Young professionals aren’t the only ones flocking to Austin. Many CEOs and other high-net-worth individuals have also made this vibrant city their home. Mentionable names include:
- Elon Musk – CEO of Tesla, Space X, and Twitter
- Drew Houston – CEO of Dropbox
- Douglas Merritt – CEO of Splunk
- Joe Rogan – Host and Podcaster
Where to Find the Best Luxury Investment Opportunities in Austin
With so much to offer, Austin’s luxury real estate market trends are seen to remain steady and stable. If you’re new to the market or are on the lookout for great deals, consider searching for properties in up-and-coming communities where home prices are relatively easier on the pocket.
Here’s a look at a few of these neighborhoods.
The Lake Travis area is centered around a massive man-made lake located 25 miles from Austin. Here, nature is your backyard. Looking out of your waterfront home, you’ll be greeted by sweeping views of hillsides, massive canyons, and gorgeous sunsets. Surrounding the lake is a variety of communities ranging from exclusive golf neighborhoods to quaint small towns. In 2022, the prices for single-family homes in the area average $334 per square foot, with an average sales price of $919,592.
25 minutes southwest of Austin, you’ll find Dripping Springs, “The Gateway to Texas Hill Country.” It’s an idyllic suburban community surrounded by majestic granite and limestone hills. Aside from the natural wonders and proximity to downtown Austin, the community is in a sought-after public school district, making it an ideal place for growing families.
For the longest time, Dripping Springs has been a hidden gem in Texas Hill Country, but in the past three years, more and more people have been discovering its many offerings. As of December 2022, the median listing price in the area was $805,000.
Located 45 minutes northwest of Austin in Spicewood, a charming suburb nestled along the Colorado River. It’s another iconic Texas Hill Country town where you can enjoy a laid-back lifestyle amidst lush cypress trees, meadows of bluebonnets, and fabulous vineyards. Nature enthusiasts will love the 40-foot waterfall and naturally occurring springs around the area.
Spicewood is perfect for those who want to live in an idyllic sanctuary with easy access to the city and to nature – all for a reasonable price. According to Realtor.com, the median listing price in the area as of December, 2022 was $987,500.
An eight-minute drive from bustling downtown Austin will lead you to Tarrytown, an affluent and serene community that sets the standard for luxury lakeside living. You’ll find stunning homes along scenic roads with gorgeous views of the Colorado River, as well as quiet streets lined with manicured lawns and deep-rooted trees. As of December, 2022, the median listing price in the neighborhood was around $2.2 million.
Right next to Tarrytown is Clarksville, another tranquil area that provides a convenient reprieve from the busy downtown area. This historic city is known for its small-town feel. Unlike its other neighbors, it doesn’t have an electric nightlife scene. But what it lacks in bars and clubs, it makes up for it in welcoming coffee shops and other homegrown businesses. The median listing home price here is around $2.4 million as of December, 2022.
Find Your Dream Luxury Home in Austin with me, Darin Walker
Austin’s luxury real estate market is highly competitive, and it includes an exclusive off-market inventory that’s only available to a select few. Having a local expert by your side who knows the ins and outs of the market opens a whole new world of opportunities for you, giving you a definite edge over the competition.
This is what I bring to the table. As Kuper Sotheby’s #1 West Austin agent, I leverage my widespread network and extensive local knowledge to give my clients access to Austin’s most exclusive listings and help them close the best transactions. From 2019-2021 alone, I have achieved $224 million in sales, $124 million of which came from off-market transactions.
I will be very happy to represent you in this fast growing and dynamic city and provide you with valuable market insights to help you make the best decisions. Get in touch today by calling 512.560.7633 or by sending an email to this address.