Austin's housing market has transformed over the past decade. Once an affordable haven, it's now a tech hub with median home prices around $550K. But Texas's no state income tax and lower cost of living compared to coastal cities still make it attractive. Here's the complete rent vs buy analysis for 2025.
Austin Housing Market: 2025 Snapshot
Home Prices by Neighborhood
Central Austin / Downtown
- Median home: $650K $900K
- Rent (2BR): $2,200 $2,800/month
- Buyer profile: Tech workers, young professionals, walkable lifestyle
East Austin
- Median home: $550K $700K
- Rent (2BR): $1,900 $2,400/month
- Buyer profile: Creative class, gentrifying neighborhoods, trendy scene
South Austin
- Median home: $500K $650K
- Rent (2BR): $1,700 $2,200/month
- Buyer profile: Families, "Keep Austin Weird" vibe, established neighborhoods
Round Rock / Pflugerville / Cedar Park (Suburbs)
- Median home: $400K $500K
- Rent (2BR): $1,400 $1,800/month
- Buyer profile: Families, good schools, more space, suburban lifestyle
Key Austin Costs
- Property tax: 1.66% 1.81% (varies by city/county)
- Homeowners insurance: $150 $250/month (higher due to weather risk)
- HOA fees (if applicable): $100 $400/month
- State income tax: $0 (Texas has no state income tax)
Property tax is the big story. At 1.75%, a $550K home costs $9,625/year in property tax, or $802/month. This is 2 3x higher than California or New York on a percentage basis, but offset by zero state income tax.
The Real Math: $550K Home vs. $1,800 Rent
Let's model buying a $550K home in South Austin versus renting a comparable place for $1,800/month.
Buying Scenario
Purchase details:
- Home price: $550,000
- Down payment (20%): $110,000
- Loan amount: $440,000
- Interest rate: 6.5%
Monthly costs:
- Principal & Interest: $2,781
- Property tax (1.75%): $802
- Homeowners insurance: $200
- Maintenance reserve (1.5%): $688
- Total: $4,471/month
Upfront costs:
- Down payment: $110,000
- Closing costs (2%): $11,000
- Immediate repairs: $5,000
- Total cash needed: $126,000
Renting Scenario
- Monthly rent: $1,800
- Renters insurance: $20
- Total: $1,820/month
The difference: Owning costs $2,651 more per month ($31,812 per year).
Breakeven Analysis
With Austin's appreciation (historically 4 5% annually but cooling) and rent increases (3 4% per year), the breakeven point is approximately 6 7 years.
This is competitive with other markets, making Austin a decent buy vs rent value despite the rapid price increases of recent years.
Use the rent vs buy calculator to model your specific Austin neighborhood.
No State Income Tax: The Game Changer
Texas has no state income tax. This is a massive financial benefit that changes the total housing cost equation.
The Math for a $150K Earner
Let's compare someone making $150,000 in Austin versus San Francisco or NYC:
California (9.3% top rate):
- State income tax: ~$13,950/year
- Property tax on $1.4M home (1.2%): $16,800/year
- Total annual tax: $30,750
New York (6.5% top rate):
- State income tax: ~$9,750/year
- Property tax on $1.4M condo (1.0%): $14,000/year
- Total annual tax: $23,750
Texas (0% state tax):
- State income tax: $0/year
- Property tax on $550K home (1.75%): $9,625/year
- Total annual tax: $9,625
The savings: You save $21,125/year versus California and $14,125/year versus New York. That's equivalent to $1,760/month (vs CA) or $1,177/month (vs NY) that you can put toward your mortgage or investments.
For high earners, Texas's tax structure more than offsets the higher property tax rate. The higher your income, the bigger the advantage.
Austin Specific Factors That Change the Decision
1. Tech Industry Volatility
Austin is now Silicon Hills. Tesla, Apple, Google, Oracle, and hundreds of startups call Austin home. The 2020 2022 migration was explosive, but 2023 2024 saw layoffs and some reverse migration.
If you work in tech:
- Your job security may be less certain than established industries
- You might relocate if a better opportunity arises in SF or NYC
- Austin's market is more volatile due to tech concentration
Consider a 7 10 year timeline minimum before buying if you're in tech. The flexibility of renting is valuable in a volatile sector.
2. Property Tax Increases
Unlike California's Prop 13, Texas does NOT cap property tax assessment increases. Your home is reassessed annually at market value.
If you buy for $550K and the home appreciates to $700K over 5 years, your property tax bill increases from $9,625 to $12,250, a $2,625/year jump, or $219/month.
There's a 10% annual cap on assessment increases for homesteaded properties, but this still means tax bills can climb faster than you expect. Budget conservatively.
3. Weather and Insurance Costs
Austin gets hail storms, tornadoes, and extreme heat. Homeowners insurance is higher than moderate climates, expect $150 250/month.
Hail damage to roofs and siding is common. Many insurers require wind/hail deductibles of 1 5% of home value, meaning a $550K home has a $5,500 27,500 deductible for storm damage.
As a renter, this is your landlord's problem. As a buyer, budget for these costs and risks.
4. Rapid Development and Changing Neighborhoods
Austin is building fast. That quiet neighborhood you love might have 500 new apartments under construction next year. Property values could rise or plateau depending on oversupply.
Research development plans in your target neighborhood before buying. Check the city planning department for zoning changes and new construction permits.
5. Commute and Traffic
Austin traffic has worsened dramatically with population growth. What was a 20 minute commute in 2015 might be 45 minutes in 2025.
If you buy in the suburbs (Round Rock, Pflugerville), your commute to downtown Austin could be 45 60 minutes during rush hour. Test this before committing to a neighborhood.
Neighborhood Guide: Where the Math Works Best
Best Value for Buyers
Round Rock / Pflugerville
- Median home: $425K
- Typical rent: $1,600
- Breakeven: ~5 6 years
- Why it works: Lower prices, good schools, family oriented, strong rent to price ratio
South Austin (Buda / Kyle)
- Median home: $475K
- Typical rent: $1,700
- Breakeven: ~6 years
- Why it works: Moderate prices, growing area, access to Austin without downtown costs
Neighborhoods Where Renting Can Make Sense
Downtown / Central Austin
- Median condo: $650K
- Typical rent: $2,400
- Breakeven: 8 9 years
- Why rent can win: High HOA fees ($400 600/month), young professional lifestyle, might relocate
East Austin (Gentrifying Areas)
- Median home: $600K
- Typical rent: $2,000
- Breakeven: 7 8 years
- Why rent can win: Uncertain long term appreciation, neighborhood transition, possible oversupply
Who Should Buy vs. Rent in Austin
Strong Case for Buying:
- Stable job in non tech sector (healthcare, education, government)
- Planning to stay in Austin 7+ years
- Have $130K+ saved and can handle monthly costs
- Starting or growing a family, value good schools
- Want to lock in costs before further price appreciation
- High earner who benefits from no state income tax
Strong Case for Renting:
- Work in tech with layoff risk or might relocate
- New to Austin, want to explore neighborhoods first
- Don't have $130K+ saved for down payment and costs
- Value flexibility and walkable urban lifestyle
- Concerned about property tax increases eating into budget
- Not sure Austin is your forever city
The Austin Pattern:
Many people rent for 2 3 years to explore Austin's neighborhoods, then buy in suburbs like Round Rock when they're ready for a family and school age kids. This gives you flexibility early while building savings, then locks in ownership when it makes sense.
How to Run Your Austin Analysis
- Decide city vs. suburbs. This fundamentally changes your price point and lifestyle. Visit both on weekdays and weekends.
- Research actual property taxes. Check Travis County, Williamson County, or your target area's tax assessor website for real rates (they vary 1.66 1.81%).
- Calculate your income tax savings. If you moved from a high tax state, your take home pay is higher in Texas. Factor this into total housing cost.
- Test your commute at rush hour. Austin traffic is real. What looks like 25 minutes on Google Maps might be 50 minutes at 8 AM.
- Account for insurance costs. Get actual quotes for homeowners insurance ($150 250/month) to avoid surprises.
- Use the calculator. Go to our rent vs buy calculator, input Austin specific numbers with 1.75% property tax, and see your breakeven timeline.
Frequently Asked Questions
What is the median home price in Austin in 2025?
As of 2025, the median home price in Austin ranges from $500,000 to $577,000 depending on neighborhood. Downtown condos and Central Austin homes are at the higher end ($600K $800K+), while suburbs like Round Rock, Pflugerville, and Leander offer homes in the $400K $550K range.
How much does it cost to rent in Austin?
Average rent in Austin ranges from $1,400 to $2,100 per month for a 2 bedroom apartment. Downtown and Central Austin run $1,800 $2,500/month, while suburbs like Round Rock and Pflugerville offer rentals for $1,400 $1,800/month. Rent varies significantly by proximity to downtown and amenities.
Why are Austin property taxes so high?
Texas has no state income tax, so property taxes fund state and local services instead. Austin property tax rates range from 1.66% to 1.81% (compared to 0.69 1.21% in California). On a $550,000 home, expect to pay $9,130 $9,955 annually in property tax. However, the lack of state income tax often offsets this for higher earners.
Does no state income tax make Austin cheaper overall?
It depends on your income. If you earn $150,000 in California, you'd pay ~$13,950 in state income tax. In Texas, you pay $0 state income tax but higher property tax (~$9,500 on a $550K home). For high earners, Texas often comes out ahead. For lower incomes, the property tax burden can be heavier relative to savings.
How long before buying makes sense in Austin?
The breakeven point in Austin typically ranges from 5 7 years. This is faster than expensive coastal cities but similar to other Sun Belt markets. Lower home prices relative to rents make buying attractive if you're staying long term. However, tech sector volatility and property tax increases can extend the timeline.