pricey places

This affluent Austin neighborhood declared the most expensive in Texas

Austin is home to the most expensive neighborhood in Texas.

Photo courtesy of Kuper Sotheby's International Realty

A new study identifying the most expensive neighborhoods across the country comes with a big surprise — an Austin neighborhood at tops the list for all of Texas.

Barton Creek has been named the most expensive neighborhood in the state by ConstructionCoverage.com. The affluent Austin neighborhood boasts a median home value of $1,046,600 — currently at its peak. Home values in the neighborhood jumped 5.1 percent in just one year, 6.3 percent in the last five, and 3.1 percent over the last decade, the study adds.

This isn't the first time Barton Creek has made headlines for its high prices. In late 2018, it became Austin's first neighborhood to cross the million-dollar mark for median home price, according to Trulia.

Meanwhile, the median home price in the U.S. is $226,700, according to the Zillow Home Price Index, which Construction Coverage used to compare more than 7,000 neighborhoods across the country.

In addition to revealing the most expensive neighborhood in each state, the study also highlighted other pricey Texas areas, and Barton Creek isn't the only local spot on the list. Eleven other Austin neighborhoods are among the 30 most expensive neighborhoods in Texas, according to the study.

Bryker Woods is the third most expensive neighborhood in the state, with a median home value of $954,700, and Old West Austin ranks eighth, with a median home value of $677,300. South River City and Zilker are Nos. 10 and 11, with home values of $605,600 and $602,300, respectively.

Not far behind are Bouldin Creek ($590,100), Rosedale ($542,200), Allandale ($518,500), Hyde Park ($503,500), Hancock ($496,300), Mueller ($496,000), and East Cesar Chavez ($494,800).

The second most expensive neighborhood in Texas is Afton Oaks. Located in Houston's ritzy River Oaks area, it boasts a median home value of $1,024,600. Fort Worth neighborhood Mira Vista comes in fourth at $893,400; San Antonio's The Dominion ranks sixth at $708,400; and North Dallas is seventh at $685,200.

Compass real estate broker Grigor Licul told Construction Coverage that the most coveted neighborhoods have more to offer than nice homes. Buyers also buy into a place with "good infrastructure, school districts, and transportation," among other things, he said.

As a result, “developers follow the demand and develop a higher end product within these neighborhoods, further stratifying the market," Licul said. "It is a reinforcing loop which causes the neighborhoods with a higher price baseline to maintain their pricing advantage [and] remain more resilient to potential downturns.”

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How Austin fits into Zillow's predicted housing market growth in 2025

Photo by Justin Wallace on Unsplash

Potential homebuyers in Austin may see improving mortgage rates and home prices in 2025, according to Zillow.

It looks like a few more people are about to turn their online home shopping daydreams into reality in 2025. Zillow, the famous real estate listings website, says in a press release that next year will likely bring "a gradual but bumpy decline in rates, impacting sales and price growth."

It attributes the forecast to "erratic and dramatic mortgage rate movements" throughout 2024, which will continue to affect the market. The website's housing market predictions report estimates that 2025 will see about 100,000 more sales than 2024, that home value growth will be "low and slow" at 2.2 percent, and that inventory and new listings will continue recovering from pandemic weakness.

On a local scale, Zillow's latest data shows Austin has already experienced a 3.4 percent drop in annual average home values from 2023 to 2024, which will continue fluctuating in 2025.

As of November, Zillow's home value index says the average home in the Austin metro is worth $443,995. That figure is greater than the Austin Board of Realtors' median home sales price in Austin-Round Rock-San Marcos, which came out to $435,000 last month, reflecting an estimated 2.4 percent increase for just the month of November year-over-year from 2023.

Pick the right season to buy
Potential buyers may see better opportunities for purchasing a home during the fall and winter, which is a typically slow season for home sales. Across 36 out of the 50 biggest U.S. metro areas, Zillow's heat market index showed a drop in competition from October to November.

"There's a strong sense of déjà vu on tap for 2025. We are once again expecting mortgage rates to get better gradually, and opportunities for buyers should follow, but be prepared for plenty of bumps on that path," said Zillow chief economist Skylar Olsen in the release. "Those shopping this winter have plenty of time to choose and a relatively strong position in negotiations."

Zillow suggests buyers may have the ability to negotiate "from a position of safety" during the slow winter months. This is especially true for Austin-area buyers, who only saw 10.4 percent of homes sell for more than their listing price in October. The website says buyers can take advantage of opportunities to buy contingent on inspections or repairs, and they may avoid bidding wars during this time.

"While the number of options available to shoppers today are lower than they will likely see in the spring, there's also less competition in the field," the report says. "The [national] share of homes that sold for more than list price was below 28 percent in October (the latest data available), continuing a downward trend that began in July."

Buyers will head to the Southwest
Eyes are also turning to the American Southwest as the top region for homebuyers in 2025, as 13 major metro areas – including Austin and San Antonio – are now considered “buyer’s markets” where buyers have more negotiating power than sellers.

However, this prediction depends on the gravity of falling mortgage rates. Homebuyers should also keep a close eye on mortgage rates in 2025, which could drop unpredictably like they have been for the last three weeks in a row. If the rates dip further than expected, that doesn’t bode as well for buyers.

“It is anticipated that a significant mortgage rate dip would bring more buyers than sellers back to the market, increasing competition and tilting negotiating power in favor of sellers,” Zillow says.

Small-home living is gaining traction
As Austin and other major cities are battling for more high density housing, buying trends are also leaning towards smaller (and more affordable) homes.

Zillow even goes as far to say that the “pandemic-era need” for large houses is officially a thing of the past.

"The term 'cozy' is appearing in more listing descriptions — 35 percent more in 2024 compared to 2023 — reflecting current design trends that have shifted away from cavernous open floor plans, toward contained spaces that have their own style and purpose," the report says.

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