Austin's Resale Market Is Struggling While New Construction Thrives. Builder Incentives Explain the Gap.

Austin’s residential real estate market is moving in two directions at once. The resale segment – homes purchased between 2021 and early 2024, many now worth less than what their owners owe – is sitting longer and selling harder. New construction, meanwhile, is outpacing last year’s numbers, driven by builders with enough capital to buy down mortgage rates to levels resale sellers cannot match. For buyers deciding between the two, the type of home now matters as much as the location or the price.

Jovanny Garcia, a solo agent with eXp Realty in Austin who also runs a construction company, sees the divide up close. He currently carries 12 active listings and at one point this year had 19. Some sell on the strength of pricing and marketing. Others linger despite both.

“The resale aspect of our market right now is pretty difficult,” Garcia says. “Those people that bought in between 2021 to early 2024 are unfortunately upside down on their loan.”

Where Builder Capital Is Redirecting Demand

The competitive imbalance between resale and new construction in Austin comes down to financing. Builders sitting on significant cash reserves are investing that money directly into rate buydowns for buyers – a subsidy resale sellers cannot replicate.

Garcia points to one builder currently closing homes at a 3.99 percent interest rate. For a buyer comparing that against a resale home financed at prevailing market rates, the monthly payment difference is large enough to shift the decision entirely. Resale homes sit longer as a result, and longer days on market erode buyer interest further.

The one resale segment where this pressure eases is the upper bracket. Garcia notes that homes priced around $1.5 million and above are still moving. He cites a $2.5 million home that closed in 14 days earlier this month. “That market is definitely still standing strong,” he says. At that level, buyers are less sensitive to interest rates.

Pricing in Brackets, Not Increments

For resale sellers who need to reduce their price, Garcia skips small reductions entirely and drops to the next buyer search bracket.

“I don’t decrease by $1,000 or $5,000,” he says. If a home is listed at $400,000, the next meaningful bracket is $375,000 – the ceiling for a different pool of buyers whose maximum budget tops out there. A cut that lands between brackets struggles to capture a new audience.

Garcia acknowledges that sellers often list above his recommendation. “All sellers think their house is magical,” he says. The adjustment comes after the listing has had time on the market and the seller has seen the response. Several of his closed transactions this year resulted from reopening a different buyer bracket after an initial overpricing.

Assumable Loans Work – but Only in Narrow Conditions

Assumable mortgages have attracted attention as a strategy for locking in below-market interest rates. Garcia promotes them selectively but cautions that most agents and buyers misunderstand how they function.

The issue is the gap between the remaining loan balance and the sale price. If a home carries a 2.875 percent rate but has a remaining balance of $150,000 on a $300,000 sale, the buyer assumes only $150,000 at that rate and must finance the other half separately – often at current market rates. The advertised rate applies to only half the purchase.

Garcia promotes assumable loans when the gap is small. One of his current listings is priced at $320,000 with a remaining balance of $298,000. “That doesn’t leave a huge gap between what the buyer has to bring to the table,” he says. In that scenario, the buyer can negotiate on the sale price, bring a modest down payment, and assume a loan whose monthly payment is lower than what the current owner pays – because the assumed balance is less than the original loan amount.

An Underserved Buyer Pool

Garcia works extensively with Hispanic buyers, self-employed borrowers, and international purchasers – groups he says other agents unfamiliar with the lending options available to them struggle to serve.

ITIN holders – buyers who file taxes with an Individual Taxpayer Identification Number rather than a Social Security number – can access down payments as low as 3 percent through specialized lending programs, according to Garcia. Self-employed buyers who cannot document income through traditional pay stubs can qualify through bank-statement-based underwriting. “A lot of agents just don’t know that there’s a plethora of loan products to help these people,” Garcia says.

International buyers face a different set of hurdles. Garcia recently helped a buyer from Guadalajara, Mexico purchase a home in Austin – a transaction that required setting up an EIN, coordinating with a CPA, arranging legal counsel, and managing title work with cross-border considerations. Without that preparation, Garcia says, buyers risk running into FIRPTA complications or IRS and title issues after closing. “It takes a village to help certain types of buyers,” he says. “A lot of agents unfortunately don’t have the capacity to understand and help these people that bring money into our economy.”

Buying for Payment, Not for Price

Buyer hesitation is the dominant mood Garcia encounters across his client base. His response is to anchor every purchase decision to a comfortable monthly mortgage payment rather than the maximum pre-approval amount.

The logic is straightforward: a buyer who locks in a home at today’s prices with a payment they can sustain is positioned to benefit when rates eventually decline. Garcia illustrates with a hypothetical. A buyer comfortable at $2,500 a month purchases at a 6.5 percent rate. If rates fall to 5.5 percent and the buyer refinances, that monthly payment drops by $200 to $300. The buyer can then apply those savings to principal each month – since the $2,500 payment was already comfortable – or keep the difference. Either way, they bought at a price that reflected current market conditions rather than peak-era valuations.

“Buyer agents need to go more in depth into the conversations with their clients to better help them understand how you can take advantage of this market and not listen to the noise,” Garcia says.

Garcia’s broader advice to investors echoes the same principle: evaluate the people behind a deal, not the marketing around it. “Don’t go working with the agent that has the most views on TikTok or Instagram or followers,” he says. “Your future depends on who you have behind you in regard to directing you correctly when it comes to real estate.”