The national housing market has hit a turning point. After years of breakneck growth, 2024 saw the lowest number of home sales since 1995. As mortgage rates hovered around 7%, many buyers stepped to the sidelines. Even the spring 2025 season—typically a hotbed of activity—failed to reignite momentum.
This market cool-down is especially visible in the second-home and short-term rental (STR) space. And yet, for savvy investors in Austin, this moment offers not just risk—but real opportunity.
The Rise and Retreat of Vacation Home Buying
During the pandemic, vacation home purchases skyrocketed. Second homes made up roughly 5% of mortgage activity at the peak. Fast forward to today: that figure has been cut in half. In 2024, second-home loans hit their lowest level since 2018, making up just 2.6% of all home loan originations.
What’s driving the decline?
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Elevated interest rates (especially for second-home loans)
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Cooling rental demand in oversaturated markets
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Fewer people working remotely full-time
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A general tightening of affordability for middle-income buyers
Still, high-net-worth individuals and cash buyers remain active—particularly in resilient markets like Austin.
Austin: A Market in Transition
While Austin hasn’t escaped the national slowdown, its fundamentals remain strong. Median home prices have seen modest declines, dipping to around $430,000 in early 2025. Inventory has grown, offering buyers more choice and better negotiating leverage than in years past.
Rental trends, however, are shifting.
STR occupancy rates are down in many central neighborhoods, and average nightly rates have softened. With growing competition among hosts and more travel-savvy guests, simply listing a home on Airbnb isn’t enough. Properties need professional presentation, clear branding, and operational excellence.
Regulation: The Wild Card
Austin’s regulatory environment for STRs continues to evolve. From permitting to zoning changes, it's more important than ever to stay ahead of city and county decisions.
This is where working with someone like me makes a real difference.
As a broker and STR operator who’s deeply embedded in this space, I stay on top of every proposed ordinance, policy shift, and code revision. I’ll help you navigate:
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STR permit availability
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HOA and subdivision restrictions
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City vs. ETJ vs. county jurisdiction
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Cash flow projections based on current occupancy and ADR trends
This isn’t a market for casual speculation—but it is a market for informed strategy.
What This Means for STR Buyers
We're in the midst of a recalibration. If you're considering purchasing a short-term rental in the greater Austin area, keep these principles in mind:
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Focus on quality over hype. The best-performing STRs today aren’t necessarily the flashiest—they’re the ones with thoughtful design, standout guest experiences, and airtight operations.
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Plan for flexibility. Choose properties that can also work as mid-term or long-term rentals in case STR regulations change.
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Buy smart. Underwrite conservatively and assume modest performance until proven otherwise.
Final Thoughts
The easy-money phase of short-term rentals is over—but that’s not bad news. With less competition and more inventory, serious investors have a chance to make strategic moves.
Austin remains one of the most compelling STR markets in the country—but local knowledge is everything. Whether you’re new to the space or expanding your portfolio, I’d love to help you find the right property—and make sure it pencils out.
Let’s talk strategy.
Contact me to schedule a consultation or browse available STR-friendly properties.
