Why Some Austin, Texas Homeowners Should Lease Instead of Selling Right Now

In a city where home values climbed sharply during the pandemic, some Austin agents are now telling sellers to stay off the market. The advice runs against the industry’s transactional incentives, but the logic is direct: in several Austin price ranges, the buyer pool has thinned enough that listing now risks closing below purchase price.

Shivraj Grewal, who founded Grewal RE Group and focuses on residential sales across the greater Austin area, says he is actively steering certain clients away from selling. “I’m actually advising sellers not to sell their property if they have the ability to hold,” he says. The reasoning centers on soft demand, particularly in the $500,000 to $1 million range, where many potential buyers face employment uncertainty and are choosing not to act.

Selling at a Loss is Already Happening

This is not a hypothetical. Grewal describes current clients who are listing homes knowing they will lose money. One couple bought their first home during Austin’s pandemic-era run-up, then purchased a larger property as their family grew. They are now selling the first house below their purchase price because their visa status and employment uncertainty make holding two properties too risky.

Their situation is specific, but the dynamic is broader. Tech-sector layoffs and return-to-office mandates have pushed many of Austin’s pandemic-era buyers out of the market or out of the city entirely. Some are leasing out the Austin homes they purchased and renting in the cities they moved back to, unable to afford a second purchase. The result is fewer competing offers on mid-range listings, giving sellers less pricing power than they had even a year or two ago.

The 14-day Window

For sellers who do list, Grewal emphasizes that the market delivers its verdict fast. “You are going to get the best price for a home within the first 14 days,” he says. If a home sits past that window, it becomes stale, and every price reduction signals weakness to buyers who are already cautious.

That reality cuts both ways. For sellers who price correctly and have a turnkey property, a sale within two weeks is still possible, particularly above $1 million in desirable West Austin pockets like Zilker and Barton Hills. But sellers who are anchored to what they paid – or what a neighbor’s house sold for in 2022 – often overprice, sit longer, and end up cutting to a number below where a correctly priced listing would have closed in the first place.

Grewal compares real estate to stocks: prices go up and prices go down. The difference is that people are more emotional about their homes. That emotional attachment leads to overpricing, which leads to longer days on market, which leads to the price cuts sellers were trying to avoid.

Leasing is Not Risk-free Either

Holding and leasing carries its own complications. Austin’s property tax rates run between 1.75 percent and roughly 2.5 percent of assessed value, according to Grewal. Rental income must cover that annual expense along with insurance, maintenance, and any remaining mortgage payment.

Grewal puts cap rates for existing homes in central Austin at roughly 3 to 3.5 percent – a number he says does not justify a purchase for investment purposes and barely sustains a hold for someone who already owns. If rental income does not cover carrying costs, the homeowner-turned-landlord is subsidizing the property out of pocket while waiting for the market to recover, a bet that requires both patience and cash reserves.

There is also the management burden. Being a landlord in a city where you still live is manageable. Being a landlord from 1,500 miles away – the reality for Austin homeowners who have relocated back to California or elsewhere – is a different proposition entirely.

When Holding Makes Sense and When It Does Not

The calculation depends on individual financial position. Homeowners with no mortgage or a low-rate mortgage from 2020 or 2021 have lower carrying costs, and the math tilts toward holding. If rental income covers most expenses, time works in the seller’s favor – Austin’s continued corporate relocations suggest prices are more likely to recover than to fall further. Grewal points to Apollo, the investment firm, which recently announced a move from New York to Austin, as one example of the inflows that could strengthen demand over time.

But homeowners carrying a high-rate mortgage, facing employment uncertainty, or unable to float a property that does not cash-flow may find that selling – even at a loss – is the less painful option. Grewal’s own client chose to sell at a loss precisely because holding felt riskier than taking a known hit. For sellers in that position, the relevant question is not whether the market will recover, but whether they can afford to wait for it.