For much of the 2020s, the Sun Belt has carried the American housing market’s growth story. Austin, Phoenix, Tampa, and similar metros became the destination markets, drawing migration from higher-cost regions and producing the kind of appreciation and rent growth that dominated real estate coverage. People were moving south and west, demand was outpacing supply, and prices kept climbing.
That dynamic has shifted. Austin home prices have been falling, and rents in several Sun Belt rental markets are softening. The cause isn’t a drop in demand, as people are still moving to these metros.
The cause is on the other side of the equation, where new construction during the boom years has finally caught up with the migration wave, and in some cases overshot it. The result is a shift that runs counter to almost everything Americans have absorbed about where the housing market is heading.
In an exclusive interview with TheStreet, BiggerPockets Chief Investment Officer Dave Meyer detailed exactly what’s happening across major Sun Belt markets, and why the supply side has quietly become the variable doing the work.
“You take Austin as an example, huge demand. Tons of people moved there, but they overbuilt,” Meyer told TheStreet. “And so that’s why prices are coming down. That’s why rents are coming down in those markets. We are seeing that in a lot of Sun Belt markets.”
Real Estate dynamics shaping Sun Belt housing markets
While Austin is a major U.S. market at the center of this shift, Meyer’s argument doesn’t start there. Instead, he cites a variable many analysts miss when they project where housing markets are heading.
Demand is the part of the equation almost every piece of real estate coverage focuses on, but Meyer’s view is that supply is doing more of the work in 2026 than people realize.
“The most overlooked metric that people miss is the supply side,” Meyer told TheStreet. “People really focus on how much demand is in a market, if people are moving, if there’s net migration, if there’s population growth. Super important. Got to look at that. But as everyone knows, there is another side to markets. Demand is one, supply is the other. And how much housing supply is existing and is coming online through new construction is hugely important.”
The Sun Belt is the clearest illustration of what happens when the supply side gets ignored. During the COVID era, the migration wave into Austin, Phoenix, Tampa, and similar metros produced demand that outpaced what those markets could supply at the time. Homebuilders responded the way the data told them to respond, and built accordingly.
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Several years of aggressive new construction later, the inventory is on the ground, and in some metros it’s now arriving faster than even the elevated demand can absorb. Prices and rents are softening as a result.
This isn’t uniform across the entire region. Some Sun Belt markets are still appreciating, particularly those where construction stayed measured. The concerning shift is concentrated in the metros that did the most aggressive overbuilding, with Austin as the most visible example and similar dynamics showing up in parts of Florida and Arizona.
The same demand that made these markets stars from 2021 to 2023 is now competing against a supply pipeline that, in some places, has overshot it.
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What this means for homebuyers and investors in 2026
The Sun Belt’s pricing softness doesn’t make the region a bad bet, but it does mean buyers and investors planning around the 2021-to-2023 narrative are working with outdated assumptions. The markets that delivered the easiest appreciation wins during the migration boom aren’t necessarily the markets producing the same wins now.
For anyone shopping homes, evaluating rental properties, or relocating with capital in tow, the new reality could require a different read on what’s driving market performance.
“Personally, one of the major things I think has played a major role in which markets perform over the last three, four years, and will going forward, is the concept of affordability,” he told TheStreet. “That has been my personal thesis for investing for four or five years now, and it’s been a strong thesis. Housing sells fastest where the average person in the average market can afford the average home.”
Applied to the Sun Belt, the affordability thesis helps explain both the boom and the current shift. Austin, Phoenix, and similar metros were affordable relative to coastal markets when the migration wave started. The wave drove prices up faster than local incomes could keep pace, impacting the affordability that attracted the migration in the first place.
The contrast Meyer points to is the Midwest, where affordability has stayed intact through the same period. Markets where the average person on the average salary can still buy the average home haven’t seen the same demand spike, but they also haven’t seen the same supply overshoot or the same pricing volatility. They’re producing slower, steadier returns instead of the boom-and-cool pattern playing out in the Sun Belt.
For buyers and investors planning the next move, the takeaway is that the Sun Belt’s recent track record is not a reliable guide to its near-term performance. The shift unfolding right now is troubling for anyone operating on the old narrative. For those watching supply and affordability, it’s a signal that the markets producing the easiest wins in 2026 may not be the same ones that did from 2021 to 2023.
Key takeaways on the Sun Belt housing shift
- Sun Belt prices and rents are falling in major metros: Per Meyer, Austin is the leading example, but the pattern is showing up across the Sun Belt. The mechanism is overbuilding during the boom years now flooding supply faster than demand can absorb.
- Supply is the most overlooked variable in housing analysis: Meyer says most coverage focuses on demand-side signals like migration and job growth. The supply side determines whether that demand translates into price growth or price softening.
- The COVID-era boom dislodged markets from fundamentals: Stimulus, low rates, and unusual migration drove demand that supply couldn’t match at the time. New construction caught up, and in some Sun Belt metros it has now overshot.
- Affordability remains Meyer’s core investing thesis: Markets perform where the average person can afford the average home. The Sun Belt’s outperformance during COVID stretched that relationship, and the current shift is partly a return to it.
- The narrative buyers absorbed in 2021 is outdated: Buyers and investors planning around the Sun Belt’s recent appreciation story are operating with assumptions that don’t match what the supply data is showing now.
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