As home prices started to boom in the early 2000s, housing speculators doubled down on fast-growing Sun Belt markets like Phoenix, Las Vegas, and Miami. Those speculators, who were often house flippers, assumed high-population Sun Belt markets would provide the best return at the lowest risk. Of course, they were famously wrong, as those booms turned out to be some of the biggest housing bubbles, which ultimately burst and helped spur the financial crisis.

The ’00s Sunbelt housing crash had one, relatively speaking, exception: The Lone Star State. Peak-to-trough, home prices in markets like Austin and Dallas only fell 8.5% and 10.5%, respectively, while house prices tracked by the Zillow Home Value Index (ZHVI) fell 63.9% in Las Vegas, 56.4% in Phoenix, and 52.2% in Miami between their peaks around 2007 and bottoms around 2012.

While zealous lenders across the nation in the mid ’00s were allowing borrowers to take on mortgages without putting much down, Texas stuck with its conservative lending practices. Those tighter lending laws helped the state escape the ’00s housing crash and, according to Texas A&M researchers, limited “the number of foreclosures.”

Fast-forward to 2023, and this time around one pocket of Texas is arguably the epicenter of both the Pandemic Housing Boom and the Pandemic Housing Correction: Austin.

Indeed, between July 2022 and April 2023, Austin home prices as measured by the Zillow Home Value Index have fallen 10.02%—that’s 10 times greater than the national decline (1%) registered by ZHVI during the same time period. That’s the biggest decline, so far, among the nation’s 400 largest housing markets, just beating out San Francisco (-10%), Bend, Ore. (-9.5%), and Boise (-9.3%).

Why is Austin getting hit so hard while much of the country sees little to no correction? For one thing, Austin got bubbly.

In theory, a housing bubble requires three elements.

First, a housing bubble requires steep home price overvaluation—meaning local home prices far exceed what local incomes historically support. That's exactly what occurred in Austin during the Pandemic Housing Boom. In fact, according to Moody's Analytics, Austin home prices were "overvalued" by 63.7% at the height of the boom in the first quarter of 2022. Anything above 25%, Moody's considers "significantly overvalued."

Second, a housing bubble requires speculation. While this one can be challenging to quantify, it usually comes in the form of investors overextending themselves. In the view of Sean Fuentes, a long-time real estate agent and housing investor in Austin, that's exactly what happened in Austin between 2020 and 2022. In his telling, many local investors were buying rental properties which they knew wouldn't yield a rent required to cover the mortgage. Why? Fuentes says they thought that Austin home prices would continue to soar, making the investment fruitful despite the fact they're losing money each month on the mortgage. That's textbook speculation.

"Once the cost of money [mortgage rates] went up, a lot of [Austin] speculators stopped buying," Fuentes tells Fortune. "Some of them are in trouble, some are taking haircuts on their investments, and others are still having to pay $100, $200, or more per month to support the property."

Third, in order to be called a bubble, prices must fall. Of course, this one can only be determined after the fact. That said, given that Austin home prices have fallen double-digits in just nine months, it's fair to say Austin also meets this criteria.

This housing correction, which has hit the hardest in Austin, is mild and tame compared to the '00s housing crash. Indeed, after falling on a month-over-month basis for just five months, U.S. home prices as measured by the Zillow Home Value Index rose in both March and April (see chart below).

Among the nation's 400 largest housing markets, 226 are either back to their all-time home price high or just set a new all-time high in April.

Of the 174 down markets, only 38 are down by 5.00% or more. Most of those markets are either in the Mountain West, Southwest, or along the Pacific Coast. The unifying characteristic among these down markets is strained fundamentals, specifically a wider-than-average gap between local house prices and local rents.

Where will Austin go from here? It's hard to say.

Moody's Analytics estimates that the Austin-Round Rock-Georgetown, Texas metro area will see a -17.9% peak-to-trough house price decline this cycle, including a -8.8% decline between Q2 2023 and Q2 2024. However, Zillow's forecast model is predicting Austin will rebound +2.2% between April 2023 and April 2024.

The biggest headwind still facing Austin is underlying fundamentals. According to Moody's Analytics, Austin was still "overvalued" by 36.6% in Q1 2023 (although down from its peak 63.7% "overvaluation" in Q1 2022). Second, inventory continues to build in Austin, with active listings up 112% year-over-year in May, according to Realtor.com.

However, Austin does have long-term tailwinds that could make a sustained correction challenging. First and foremost, it's still a hot destination for tech workers and employers who are fleeing high-tax states.

Keep in mind that while Austin home values have come down a bit over the past year, they're still up 42.6% since March 2020. Most Austin homeowners have an enormous amount of home equity.