Ed Neuhaus 
My clients who are empty nesters carry more equity than almost anyone I work with. They bought in Bee Cave or Lakeway 15 or 20 years ago, paid somewhere between $350,000 and $600,000, and now theyre sitting on a home worth $,000 to .4 million. Their kids are gone. The house is huge. And every spring theyre out there on a riding mower covering two acres by themselves wondering why they still live here.
The honest answer is usually inertia. Downsizing feels complicated, so people put it off. But here is what the math actually looks like: a married couple selling a home with $700,000 in profit gets the first $500,000 tax-free under Section 121 of the federal tax code. Texas has no state income tax. If they bought a $600,000 lock-and-leave condo in Lakeway with cash, they are done with the mortgage entirely. Monthly carrying costs drop from $4,000 to $800. That is not a small thing.
This guide is specifically for the Hill Country empty nester. Not someone selling a $400,000 starter home on the east side. The person who built their life in a West Austin school district, raised their kids in a neighborhood where everyone knows each other, and now has a house that is too big, too expensive to maintain, and too full of rooms that nobody uses. Let me walk you through what this actually looks like.
The Real Cost of Staying in the Big House
Property taxes in the Hill Country on a $1 million home run $15,000 to $25,000 a year depending on whether you are in Bee Cave, Lakeway, or unincorporated Travis County. That is before insurance, which is running $4,000 to $8,000 a year for a large home with a pool. Add lawn care ($200-$400/month), pool service ($150-$250/month), and one HVAC replacement every decade, and you are spending somewhere between $25,000 and $40,000 a year just to own the house. Not the mortgage. Just the carrying costs on top of it.
If your kids are gone and you are rattling around in 4,200 square feet, those numbers hit differently than they did when the house was full. You are paying for square footage you are not using, maintaining spaces nobody visits, and dragging a pool you swim in four times a year.
I am not saying any of this to push you out of your home. Plenty of people love their big houses even with empty rooms. But if the maintenance has become a part-time job and the joy-to-effort ratio has flipped, that is worth paying attention to.
Where Empty Nesters Are Moving in the Hill Country
The good news for anyone downsizing in the Hill Country right now is that you have real options, and they are genuinely good ones. Not settle-for-less options. Actual upgrades in terms of lifestyle, if the lifestyle you want involves less lawn and more living.
Tuscan Village. Lakeway
This is the one most people in the Hill Country eventually hear about. Tuscan Village is a 55+ community in Lakeway built around resort-style condo living. HOA covers exterior maintenance, landscaping, the works. You lock the door and leave for three months without worrying whether the yard looks like a disaster when you come back. Clubhouse, fitness center, pool, regular social programming. It is not a nursing home. It is closer to a country club that you actually live in.
Prices run from the mid-$400s into the high $700s depending on size and finishes. For someone selling a $1.1 million home with a $700,000 profit, you could buy here in cash, bank the rest, and never have a mortgage payment again.
The Rough Hollow Communities. Lakeway
If you want a lake view without the full 55+ community setup, the Rough Hollow area has a few lock-and-leave options worth knowing. The Point at Rough Hollow is newer construction with open floor plans, canyon and lake views, and HOA-covered low-maintenance living. The Vineyards at Rough Hollow goes even further. HOA covers front and back landscaping plus exterior maintenance and insurance. You own the home, but you do not own the maintenance headaches that come with it.
These run higher than Tuscan Village. Budget $600,000 to $1.2 million depending on the unit. But you are also getting Rough Hollow amenities, lake access, and the Hill Country setting that honestly never gets old. For a deeper look at everything Lakeway has to offer, the best neighborhoods in Lakeway guide is worth reading.
Single-Story Homes in Bee Cave
Not everyone wants a condo. Plenty of downsizers want a house, just a smaller one, ideally single-story because the knees are not what they were. (That is not a knock. That is just reality, and anyone who tells you otherwise has never twisted their ankle on a staircase at 2am.)
Bee Cave has a solid inventory of single-story homes in the $600,000 to $900,000 range, and the city property tax rate is the lowest in the area at $0.02 per $100 of assessed value. I have written a whole piece on Bee Cave property taxes because this genuinely matters for someone on a fixed income, the difference between Bee Cave and some Travis County addresses can run $3,000 to $5,000 per year on a $900,000 home.
Neighborhoods like The Homestead and Signal Hills offer the Hill Country aesthetic, limestone, mature oaks, quiet streets, in a smaller footprint than the big family homes nearby. You are still in the Hill Country. Just not drowning in it.
New Construction in Dripping Springs
If budget is more of a consideration, Dripping Springs has seen a massive wave of new construction at lower price points than Bee Cave or Lakeway. Medians are running $550,000 to $650,000, and builders are competing hard with incentives right now, rate buydowns, closing cost credits, sometimes both.
Single-story plans are everywhere in Dripping Springs new construction. Builders know who is buying and they are designing for it. The tradeoff is the commute to Austin (30-40 minutes without traffic, longer with), but if you are retired or semi-retired and that is not a daily concern, Dripping Springs gives you a lot of home for the money.
The Capital Gains Math. Read This Before You List
This is the section most people skip and then call me about six months after they have already listed the house. So please read it before you do anything.
Under Section 121 of the Internal Revenue Code, a married couple selling their primary residence can exclude up to $500,000 in capital gains from federal taxes. Single filers get $250,000. To qualify, you need to have owned and lived in the home as your primary residence for at least 2 of the last 5 years before the sale. The two years do not have to be consecutive.
Here is why this matters for Hill Country empty nesters specifically. Lets say you bought in Lakeway in 2007 for $420,000 and your home is now worth $1.1 million. That is $680,000 in profit. If you are married, the first $500,000 is tax-free. The remaining $180,000 gets taxed at federal capital gains rates, 0%, 15%, or 20% depending on your total income for the year. At the 15% rate, that is $27,000 in federal taxes on the portion above the exclusion.
That is not nothing, but it is also not catastrophic. And Texas takes zero.
What gets people into trouble is waiting too long. If you have already moved out and the house has been a rental for more than 3 years, you may not meet the residency test and you lose the exclusion entirely. If you have converted it to an investment property without any planning, the tax picture changes significantly. Talk to a CPA before you make any moves. I can give you the framework, they give you the actual numbers.
One more thing worth knowing: the $500,000 threshold has not been adjusted for inflation since 1997. Congress periodically discusses raising it, and there was a proposal in 2025 to do so, but as of February 2026 nothing has passed. You are working with 1997 numbers. For Austin, where appreciation has been extreme, this is a real issue. Plan accordingly.
The Homestead Exemption Timing Problem
If you are in the Hill Country and thinking about downsizing, do not forget about your homestead exemption. In Texas, the over-65 homestead exemption freezes your school property taxes at whatever they were when you turned 65, that freeze travels with you if you move to a new primary residence, but there is a process for claiming it and timing matters. I covered this in detail in the homestead exemption guide, but the short version: plan your move timing so you do not accidentally lose the exemption for a full tax year.
How to Time the Sell/Buy When You Need Both
This is the part that actually paralyzes people. What if we sell and cannot find anything? Or the reverse: what if we buy something and then cannot sell fast enough?
Here is the reality in the 2026 Austin market. Days on market for homes in the Hill Country are running 75 to 113 depending on the submarket. That means you have time. You are not in a 2021 market where homes sold in three days. If you list your home properly priced today, you realistically have two to three months before closing. That is enough runway to find and close on a condo or smaller home if you are organized.
The strategies I walk clients through:
List First, Then Buy
This is the lower-risk approach and the one I usually recommend for this demographic. Price your home correctly, pricing is where most sellers leave money on the table, get it under contract, and negotiate a leaseback or extended close so you have time to find the right replacement. In the current market, most sellers can negotiate a 30 to 60 day leaseback from the buyer. That gives you a contract in hand, cash certainty, and time to shop without desperation.
Buy First With a Bridge Loan or HELOC
If you find something you absolutely love and do not want to lose it, a bridge loan lets you purchase the new property using your existing equity as collateral before your current home sells. HELOCs are another option if you have the available credit line. Neither is free, but the cost is usually worth it for the right property. Talk to your lender before you need it so you are not scrambling when the right place shows up.
Sell, Rent Temporarily, Then Buy
This one sounds painful but it actually works really well for people who are not sure exactly where they want to land. Sell the big house, rent a furnished apartment or short-term rental for 3-6 months, and shop with cash and no contingency. You will get a better deal as an all-cash buyer with a clean offer, and you get to actually live in a few different neighborhoods before you commit to one. Lakeway and Bee Cave both have furnished rental options that work for a 3-6 month bridge.
What About the Market? Is Now a Good Time?
There is never a perfect time. But let me tell you what the current market looks like for someone in your position.
On the sell side: the Hill Country market has softened from its peak. You are not going to get 2021 prices. But if you bought more than 8 years ago, you are still sitting on enormous equity. The people who got hurt were the ones who bought in 2021-2022 at peak prices and need to sell now. That is not most empty nesters in this corridor, you bought before the boom.
On the buy side: this is genuinely the best buyer market in a decade. More homes to choose from, less competition, and sellers are negotiating. If you are buying a condo in Tuscan Village or a single-story home in Bee Cave, you have leverage right now that you would not have had three years ago. Inspection repair requests. Closing cost credits. Seller concessions. In 2021 you could not ask for any of that.
The combination of high equity on the sell side and a buyer market on the buy side is, honestly, a pretty ideal situation for a downsizer. The math lines up right now in a way it does not always. If you want a deeper read on where Austin prices are headed, the sell now or wait guide has the carrying cost math that usually makes people stop waiting.
Practical Things to Get Right Before You List
A few things I see empty nesters trip on that are worth flagging:
Declutter before you stage, not after. You have been in this house for 15-20 years. There is stuff. A lot of stuff. Professional stagers will tell you the same thing: the biggest impact in an established home is the removal of things, not the addition. Start 60-90 days before you want to list, not two weeks before.
Update the right things. In the Hill Country buyer market, buyers are picky. But they are picky about HVAC age, roof condition, and water heater, not your granite countertops from 2009. A pre-listing inspection will tell you what buyers are going to flag and gives you the option to fix things proactively rather than negotiate them away in the contract.
Price it right from day one. This market does not forgive overpricing. The first two weeks on market are when you get the most activity and the best offers. If you chase the market down from an inflated starting price, you will end up with less than if you had priced correctly from the beginning. The selling guide for Bee Cave, Lakeway, and Dripping Springs covers the submarket-specific details that make a real difference in your outcome.
Frequently Asked Questions
You Built Your Life Here. Let Us Help You Find the Next Chapter.
At Neuhaus Realty Group, we work with a lot of empty nesters making exactly this move. It is one of the more complex transactions out there, you are selling your largest asset, navigating tax implications, and buying something new all at the same time, often while still processing the emotional weight of leaving a house full of memories.
The financial side we can help you map out. What I can tell you from 16 years of doing this is that most people who downsize in their 50s and 60s look back and say they should have done it sooner. The house that felt like home eventually becomes a house that runs your schedule. The next chapter usually involves a lot more living.
Want to know what your home is worth before you start planning? The free market analysis guide explains how Hill Country values get calculated in this market. Or if you are ready to talk through the specifics of your situation, reach out to Ed Neuhaus directly, we can look at the numbers together and figure out what makes sense for you.
Browse available homes in Lakeway or Bee Cave to get a sense of what the market looks like right now. Or search by zip code in 78738 if you want to stay in the Bee Cave area.
