House prices are falling fast in this former boomtown – now airlines are fleeing

In recent months, Austin, Texas, has become a symbol of what can happen when airlines and homebuilders get too excited about a city’s growing popularity.

Thanks in part to the city’s booming tech and music industries and the state’s low taxes, Austin has seen an influx of new residents in recent years, a trend that has only intensified during the pandemic.

According to a report from the University of Twente, the city’s population as a whole has increased from 1.6 million in 2013 to 2.3 million in 2023. TheStreet.

This caused developers and home builders to flock to Austin and use the city as a tourist attraction, prompting airlines to quickly set up new flight routes.

But it appears the boomtown bubble has burst.

House prices in the city are plummeting as demand outpaces supply, and several airlines are cancelling routes they launched with great fanfare.

American Airlines has confirmed it is cutting four routes to Austin from Boston, Nashville, Raleigh-Durham and Orange County, California.

This is in addition to further route cuts the airline made in 2023 and earlier this year.

American told The points man that the first three routes will be canceled in the first week of November and that the flight to Orange County will be canceled on January 5, 2025.

With these cuts, American has virtually reversed all of its expansion plans in the Texas capital.

The airline initially expanded its routes to Austin during the pandemic, when the city’s popularity surged.

From March 2021, 24 domestic and international routes opened and plans were unveiled for a 1,400 square metre Admirals Club members lounge in AUS.

At its peak, some industry experts even speculated that Austin could become a focus city for Americans, The Points Guy reported.

But in 2023, the airline cut 21 routes from the city, including Las Vegas, New Orleans and Orlando. In July of this year, it cut another five.

And American isn’t the only airline pulling out of the Texas capital.

British airline Virgin Atlantic cancelled its London to Austin route, which was due to start in March 2022, in January this year due to a lack of demand.

“We’ve loved flying our customers to Austin and experiencing this beautiful city of music and culture, but demand in the technology sector is unlikely to improve anytime soon. Business demand is at 70 percent of 2019 levels,” Virgin Atlantic Chief Commercial Officer Juha Jarvinen said at the time.

‘That is why we have unfortunately made the difficult decision to discontinue the service.’

Spirit Airlines also canceled a direct international route between Austin and Monterrey, Mexico, in September 2023 due to low demand.

Delta Air Lines and Southwest Airlines still offer flights on many of the routes that American has since discontinued.

American Airlines has confirmed it is cutting four routes to Austin-Bergstrom International Airport (pictured) from Boston, Nashville, Raleigh-Durham and Orange County, California.

British airline Virgin Atlantic cancelled its London to Austin route, which was due to launch in March 2022, in January this year due to a lack of demand (Pictured: Austin-Bergstrom International Airport)

Austin’s popularity has led to a surge in home construction, but inventory isn’t being met by strong demand, experts say

Tesla moved its headquarters to Austin, Texas in 2021 (Photo: CEO Elon Musk)

This is because house prices in the city are falling rapidly as demand decreases.

The real estate market boomed during the pandemic due to an influx of highly skilled workers looking to capitalize on the booming tech sector, while young professionals from states like California became unaffordable.

This has led to an increase in housing construction, but experts say the large inventory cannot meet the strong demand due to high mortgage rates and climate concerns.

In the year through May, home prices in Austin fell 3.5 percent, the largest decline among the top 100 U.S. markets.

Several major tech companies also moved their headquarters to the city, including Oracle in 2020 and Tesla in 2021.

But in April, Oracle CEO Larry Ellison made a surprise announcement that the company would move to Nashville, boosting Austin’s reputation as a technology hub.