Is It a Good Time to Buy an Investment Property in Austin? Austin MLS Cap Rate Analysis by Zip Code

August 4, 2025: In Central Texas, real estate investors often look at cap rates—net operating income divided by purchase price—to judge if a property is a wise investment. Using the most current Austin MLS data, the median gross cap rate across the region is 4.121 percent. That average serves as a benchmark for evaluating performance by zip code.

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In East Austin, zip code 78725 leads the market. With a median home price of $284,500 and a cap rate of 5.79 percent, it delivers a $114,977 positive differential compared to the benchmark. Zip code 78957 in Smithville offers the next strongest return, with a 5.44 percent cap rate on similarly affordable property values, yielding about $100,029 above average. Nearby 78724 in East Austin shows a cap rate of 4.89 percent, also well above average and appealing for investors tracking Austin MLS listings.

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Other areas in suburban and surrounding communities also outperform the median. ZIP code 76537, Jarrell, offers a cap rate of 4.73 percent and a positive differential in the double‑digit thousands compared to the benchmark. Zip code 78616, in Dale, shows a 4.65 percent cap rate. Regions like 78640 in Kyle (4.51 percent), 78610 in Buda (4.46 percent), and 78621 in Elgin (4.31 percent) are all above the 4.121 percent average. Investors using Austin MLS search filters for these codes may find stable rental demand paired with lower property cost. Zip codes 78654 (Marble Falls) and 78612 (Cedar Creek) each generate about 4.18 percent cap rates; 78666 (San Marcos) also offers 4.18 percent. Zip code 78654 slightly dips below average with a cap rate of 3.99 percent but remains viable given lower entry prices.

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In contrast, many high‑value residential zip codes closer to downtown Austin show cap rates far below the 4.121 percent average. Zip code 78703 in West Austin, with a median home price of $1,467,200, yields just 0.51 percent. That corresponds to a negative differential exceeding $1.28 million relative to expectations. Zip code 78751 (Hyde Park area) posts a cap rate of 1.10 percent, with a $461,479 shortfall. Westlake Hills, in zip code 78746, records a 1.12 percent cap rate, while Brentwood in 78756 posts just 0.67 percent. Even Southwest Austin’s 78735 yields only 1.24 percent. High property prices and property taxes in these codes reduce grosscap rate potential even though rental demand may be strong.

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Overall, the Austin MLS data indicates that investing right now in suburban and surrounding community zip codes such as 78725, 78957, 78724, 76537, 78616, 78640, 78610, 78621, 78654, 78612, and 78666 is likely to produce stronger cap rates and positive income differentials compared to the average. Meanwhile, entering core Austin neighborhoods like 78703, 78751, 78746, 78756, and 78735 may mean low immediate cash flow, even if long‑term home value appreciation could be higher.

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Given the 4.121 percent median gross cap rate as a benchmark, zip codes above that number present stronger yield potential. Data from the Austin MLS shows the top performers these days are 78725 at 5.79 percent, 78957 at 5.44 percent, 78724 at 4.89 percent, and other zip codes in the 4.3 to 4.7 percent range. Conversely, luxury and high‑priced central locations fall in the 0.5 to 1.3 percent zone.​

For real estate investors asking “Is it a good time to buy an investment property?”, the answer depends on location. If investing using Austin MLS listings in high‑cap‑rate zip codes outside the city center, cash‑flow returns look more attractive now. If focusing instead on central or luxury neighborhoods, investors may need to rely more on long‑term appreciation than immediate income.

Frequently Asked Questions: Austin MLS Cap Rate Analysis

1. What is the current average cap rate in the Austin MLS area?

Based on the most recent Austin MLS data, the median gross cap rate across all listed zip codes is 4.121 percent. This figure serves as the benchmark for measuring whether a property is performing above or below average in terms of investment returns. Out of all the zip codes analyzed, 18 exceed the desired cap rate, showing stronger income potential compared to the rest of the market.

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2. Which Austin MLS zip codes offer the highest cap rates in 2025?

The strongest performer is 78725 (East Austin) with a cap rate of 5.79 percent and a $114,977 positive income differential compared to the benchmark. 78957 (Smithville) follows with a 5.44 percent cap rate and a $100,029 surplus. Other top zip codes include 78724 (4.89 percent), 76537 Jarrell (4.73 percent), 78616 Dale (4.65 percent), and 78640 Kyle (4.51 percent).

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3. Why do some Austin neighborhoods have very low cap rates?

High‑value central Austin neighborhoods tend to have low cap rates due to elevated property prices and tax burdens that outpace rental income. For instance, 78703 (West Austin) shows a cap rate of just 0.51 percent with a deficit exceeding $1.28 million. Similarly, 78751 (Hyde Park) posts 1.10 percent, and 78746 (Westlake Hills) records 1.12 percent.

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4. How do suburban and surrounding communities compare to central Austin in cap rates?

Suburban and surrounding communities significantly outperform central Austin in cap rate performance. For example, 78621 Elgin (4.31 percent), 78610 Buda (4.46 percent), and 78612 Cedar Creek (4.18 percent) deliver well above the regional average. In contrast, central luxury markets like 78756 Brentwood (0.67 percent) and 78735 Southwest Austin (1.24 percent) fall far behind.

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5. Is it a good time to buy an investment property in Austin using MLS data?

According to current Austin MLS data, it may be a good time to buy in zip codes showing above‑average cap rates. Investors focusing on areas such as 78725, 78957, 78724, 76537, 78616, and 78640 can achieve cap rates ranging from 4.5 to nearly 6 percent, well above the 4.121 percent benchmark. However, in high‑priced central zip codes like 78703 and 78746, returns remain under 1.5 percent.