The Dallas Housing Market is Slowing Down
As buyers make financial decisions, mortgage rates and fears of a recession continue to weigh heavily on the Dallas housing market. Building permits and housing starts are both declining on the supply side. Prices are correcting, and the inventory of homes is rising by triple digits as compared to the previous year. As seen by the sales volume, buyers are calmer now than during the pandemic panic, as many important indices such as days on market (DOM) and months of inventory (MOI) are converging back to pre-pandemic levels.
Much of the decline from last year to this year can be attributed to recent interest rate increases that are cooling off many other markets across the country. According to Zillow, the typical home value for the Dallas-Fort Worth-Arlington area rose by a whopping 13.8% in the past 12 months and their forecast is that it drop by 0.2% between Dec 2022 to Dec 2023. It shows that Dallas housing prices are unlikely to crash even if there is a downturn in the housing market.
The median home price in Texas continues to decline, as the seasonally adjusted median price decreased 1 percent month over month. The four largest metropolitan areas saw variable monthly changes. Despite depreciation over the past six months, the state’s median price remained 6.1% higher than levels one year ago. Dallas had the highest rate of growth at 9.6 percent, while Austin’s rate of growth decreased to 0.1 percent, according to the Texas Real Estate Research Center at Texas A&M University.
In recent months, the Dallas-Fort Worth metropolitan region has witnessed a major increase in inventory. Recent statistics revealed a substantial increase in the number of active listings in the DFW region. In 2023, this might make it easier for DFW buyers to locate and purchase a home. In December 2022, the Dallas-Fort Worth housing market had around 2.2 months of available houses, a jump of 183.45% YoY.
Months inventory for single-unit residential housing rose by 199.23% to 2.2 months. The active listings for residential homes in the Dallas real estate market increased significantly. The number of active listings in the Dallas-Fort Worth-Arlington metropolitan region increased by 163.27% while new listings dropped by 10.64%, according to the Texas Real Estate Research Center. Buyers looking to buy a home in the DFW region later this year might find solace in these statistics.
Although the current market is far from “normal” or balanced, let’s be upfront about that fact. In Dallas, it’s still a seller’s market because of the lack of inventory. Even so, buyers should find it a little less difficult in the future thanks to these new developments. Over the next several months, expect the pace of home price rise to decrease. Many big metro regions are already beginning to show signs of this.
S&P CoreLogic Case-Shiller Dallas Home Price NSA Index (As of Nov 2022, Published Jan 31, 2023)
The S&P CoreLogic Case-Shiller Dallas Home Price NSA Index measures the average change in the value of the residential real estate in Dallas given a constant level of quality. The index survey does not include condominiums and townhouses and only covers pre-owned properties.
- November 2022 = 287.47
- November 2021 = 259.12
- 1-Year Return = 10.94%
- October 2022 = 290.68
- 1 Month Percent Return = -1.10%
Dallas Housing Market Report (DFW) – December 2022
Home prices in North Texas and throughout the country have increased significantly in recent months as demand for housing has increased. Dallas’s real estate market is also following this trend. The Dallas-Fort Worth area has landed on a list of the country’s most overvalued housing markets. According to the study conducted by Florida Atlantic University, the DFW area ranked 19th for overheated housing, with homes selling for an average of 31.57 percent more than they were worth.
The updated list is similar to a survey put out by the schools in August in terms of which cities appear, but the premium has increased in many markets. And Atlanta has replaced Stockton, Calif., in the top 10. Dallas-Fort Worth, TX failed to make the Top 10 but has also shown a steep increase in how much premium buyers are paying — almost 43.8 percent more than they were worth.
Intense competition for houses across Texas led to another huge bump in sales prices. The DFW housing market remained strong in December 2022. The median sales price was $388,995, up almost 5.7% from a year earlier. The Texas Real Estate Research Center provides monthly statistics on the DFW housing market for single-family homes. The Texas REALTORS® provided the data for this report.
Dallas Housing Demand
- Sales volume for single-family homes decreased 28.39% YoY from 8,782 to 6,289 transactions.
- Year-to-date sales reached a total of 89,987 closed listings.
- Dollar volume dipped from $3.9 billion to $2.91 billion.
Are Home Prices Dropping in Dallas?
- The average sales price rose 4.14% YoY from $444,604 to $463,013,
- The average price per square foot subsequently rose from $188.81 to $197.47.
- The median price rose 5.71% YoY from $368,000 to $388,995,
- The median price per square foot also rose from $179.83 to $189.85.
- Close to Original List Price was 93.65%%, down -7.14% YoY.
Housing Supply in Dallas
- New Listings decreased by 10.64% YoY.
- Active Listings increased by 163.27% YoY.
- Months inventory for single-family homes rose from 0.7 to 2.2 months.
- Days to sell rose from 68 to 90.
- When an economy begins to slow, it has the potential to have an impact on its housing markets.
- Housing markets are affected by economic slowdowns, which in turn have an impact on the economy because housing-related activities decline and slow overall economic activity.
- The state of Texas is experiencing a boom in its economy as businesses are pouring money into the Lone Star State at an unprecedented rate.
- Year-to-date sales reached a total of 97,088 closed listings in December.
- Dollar volume dipped from $4.16 billion to $3.09 billion.
- The Texas Workforce Commission reported that in December, the MSA jobs increased from 3,951,900 to 4,234,600.
- This represents a 7.15 percent year-on-year increase or 282,700 new jobs as compared with Dec 2021.
- Over the last five years, the job growth rate has averaged 3.0 percent.
- As more Texans jumped back into the job market, the unemployment rate fell to 3.2 percent in December from 3.60 percent in 2021.
Dallas County Housing Market Trends & Statistics – Dec 2022
In December 2022, active listings in the area were up 74.9% from a year earlier. At the end of Dec 2022, the months of inventory (MOI) increased from 0.8 to 1.7 months, according to the latest data released by MetroTex, the largest REALTOR® association in North Texas. The new construction in the last 10 years has not been anywhere near enough to handle the population growth in Dallas.
Home Sales Price: The Dallas median home price jumped by nearly 1.6% year-over-year to $329,000 in December 2022. The competition for homes on the market has placed consistent pressure on home prices. Due to a large gap between supply and demand, the market is expected to continue to favor sellers in 2023, according to several national housing forecasts. Homebuyers across the country are expressing an increased interest in suburban neighborhoods. Home prices in suburban areas are expected to rise faster as a result of an increase in demand combined with a decrease in the number of available properties on the market.
Listing Prices: These housing market median prices are based on all properties listed for sale on realtor.com. Land and multi-unit residences included. This data is provided as an informational resource only. In December 2022, the median list price of homes in Dallas County, TX was $360K, trending up 6.2% year-over-year. The median listing price per square foot was $201. Dallas county was a balanced real estate market, which means that the supply and demand of homes are about the same. The market has a total sales-to-total listings ratio between 0.12 and 0.2.
Days on Market: On average, homes in Dallas, TX sell after 52 days on the market. The trend for median days on market in Dallas, TX has gone up since last month, and slightly up since last year.
Neighborhoods: There are 26 cities in Dallas County where Realtor.com has active listings. University Park has a median listing home price of $2.3M, making it the most expensive city. Balch Springs is the most affordable city, with a median listing home price of $250K.
Dallas Rent Prices: As of January 29, 2023, the average rent for a 1-bedroom apartment in Dallas, TX is currently $1,450. This flat compared to the previous year. Over the past month, the average rent for a studio apartment in Dallas decreased by -5% to $1,232. The average rent for a 1-bedroom apartment remained flat, and the average rent for a 2-bedroom apartment remained flat.
- Two-bedroom apartment rents average $1,997 (a 2% increase from last year).
- Three-bedroom apartment rents average $2,378 (a 0% increase from last year).
- Four-bedroom apartment rents average $2,710 (a 4% increase from last year).
Below is the latest Dallas (County) housing market report released by MetroTex REALTORS. Dallas is a minimally walkable city in Dallas County with a population of approximately 1,197,970 people. The Dallas County housing market saw a decline in sales in December but prices continue to increase albeit at a slower rate.
- The median sales price increased by 1.6% YoY to $329,000 in Dec 2022.
- Closed sales decreased by 37.4 percent year-over-year.
- Active listings rose by 74.9 percent year-over-year.
- The total days on market equaled 72 — 9 days more than Dec 2021.
- A six-month supply of houses for sale is generally considered to be a ‘healthy’ real estate market.
- By the end of December, the available housing supply in Dallas County was 1.7, up from 0.8 months in 2021.
- From this perspective, the Dallas real estate market is a seller’s market.
Dallas Housing Market Forecast 2023
As a result, what do you think the Dallas real estate market will look like in 2023? Among the most affordable real estate markets in the state of Texas, Dallas is one of the most affordable. It is also one of the most active real estate markets in the country for renting out properties. Let us look at the price trends recorded by Zillow over the past few years — Zillow Home Value Index.
ZHVI represents the whole housing stock and not just the homes that list or sell in a given month. The typical home value of homes in the DFW metro is currently $386,853. It indicates that 50 percent of all housing stock in the area is worth more than $386,853 and 50 percent is worth less (adjusting for seasonal fluctuations).
DFW home values have gone up 13.8% since Dec 2021. Here’s Zillow’s housing market forecast for Dallas and DFW MSA. Housing inventory remains low in many major cities across the nation, and Dallas is no exception to that.
- Dallas-Fort Worth-Arlington Metro home values have gone up 13.8% over the past year.
- The DFW housing market forecast ending December 2033 is positive.
- Zillow predicts that DFW home values may grow by 0.2% by Dec 2023.
- If this forecast is correct, DFW home prices will be higher in the 4th Quarter of 2023 than they were in the 4th Quarter of 2022.
These numbers can be positive or negative depending on which side of the fence you are — Buyer or Seller? Dallas and the entire metro area market is so hot that it cannot shift to a complete buyer’s real estate market, for the long term. In a balanced real estate market, it would take about five to six months for the housing supply to dwindle to zero.
In terms of months of supply, Dallas can become a buyer’s real estate market if the supply increases to more than five months of inventory. And that’s unlikely going to happen. Therefore, in the long term, the Dallas real estate market remains strong and skewed to sellers, due to a persistent imbalance in supply and demand. As of now, the month of supply is 2.2 months in Dallas-Fort Worth-Arlington.
Dallas Real Estate Market: Is It A Good Place For Investment?
Is Dallas a Good Place For Real Estate Investment? Many real estate investors have questioned whether or not purchasing a property in Dallas is a wise financial decision. If you want to know what the real estate market will be like for real estate investors and buyers in 2021, you need to dig deeper into the local trends. The Dallas housing market is an excellent place to invest in income properties, whether you’re purchasing your first or simply adding another to your portfolio. It doesn’t get much more “location” than this when it comes to real estate.
The Dallas housing market offers excellent profit-generating opportunities for all types of real estate investors, from first-time buyers to seasoned professionals. In Dallas, large apartment buildings and single-family homes account for the vast majority of the city’s housing stock, with small apartment buildings accounting for the majority of the remaining properties. Renter-occupied and owner-occupied housing are found in equal amounts in Dallas.
Dallas is one of the cities in the United States where renting is more cost-effective than buying. A large part of the reason why Dallas has grown over the years has been the influx of young people who have settled in the city and are continuing to do so. They have preferred to start with rental properties rather than purchasing their own homes. In Dallas, the demand for rental units has increased by 14 percent in the last year, making now an excellent time to make a financial investment in the city’s housing market.
Single-family homes make up approximately 43.51 percent of the total housing units in the city of Dallas. In January and February, Dallas-Fort Worth was the most active market in the country in terms of single-family construction starts. With 11,636 residential projects permitted, it ranked first in the nation for the combined number of single and multiple-family units being constructed, according to the U.S. Census Bureau’s Building Permits Survey.
Dallas has a thriving economy and is experiencing steady population growth, which will help you put more money in your pocket. As rents rise, savvy investors should consider investing in Dallas commercial real estate. A single-family home or a multifamily apartment as an investment in the Dallas real estate market, regardless of whether it is a single family home or a multifamily apartment, is an investment that can reap significant rewards if you have some experience and education in real estate investing. When it comes to investing in real estate, you need to know where to put your money, which means conducting extensive research to determine the best neighborhoods in the Dallas real estate market.
Top Reasons To Invest In The Dallas Real Estate Market
Let’s take a look at the number of positive things going on in the Dallas real estate market which can help investors who are keen to buy an investment property in this city.
Dallas is a Growing Real Estate Market
One of the largest metropolitan areas in the USA, Dallas is currently the beating heart of the Texas housing market. Dallas’s population has grown at twice the national rate for years now and this pushes the prices of Dallas investment properties higher due to builders not being able to keep up. Dallas home prices have been on the rise in the last 10 years. In fact, over the last 6 years, 3-bedroom homes in Dallas have appreciated by 45%. During the same period, 3-bedroom home prices in Dallas appreciated by 41% nationwide.
Dallas’s housing prices have increased 29% over the last three years, even with these increases in home prices, they are still competitive for investment properties and you can expect further increases over the years. This shows us that home prices in Dallas are rising more quickly than in most other cities across the nation. If you want to buy an investment property in Dallas, don’t wait around, go ahead and do it.
A strong economy has buoyed home prices in Dallas beyond their fundamental levels for a sustained period, according to a report by Florida Atlantic University associate dean Ken Johnson. Home prices in Dallas are still appreciating but at a decreasing rate, suggesting that the current upward pattern in property appreciation is nearing an end. A bubble is not likely but a significant slowdown in-home price increases are most likely, according to James Gaines, chief economist with the Real Estate Center at Texas A&M University.
He said that things may slow down in Dallas, but it would take a major economic event to do that. The university study isn’t the first to warn of a home price correction in the Dallas area. But other reports by CoreLogic and Fitch Ratings have said North Texas home prices are overheated. And with the outbreak of the COVID-19 pandemic, things have really slowed down, at least for the short period.
No State Capital Gains Tax
Texas has no state income tax, and many property owners are attracted to the state because no state capital gains tax on income from sales of property (Landowners still have to pay federal taxes on their gains under certain situations). This makes investing in Texas more lucrative for investors. Dallas house prices are also much lower than in other major cities.
The result is an attractive rental property market for domestic and international investors alike. According to the Texas Association of Realtors, around one-third of international investors come from Latin America, just ahead of those from Asia. European buyers make up around one in 10 buyers, while Indian buyers are also a notable presence in the Texas real estate market.
Dallas’ Strong Economy
You should think of investing in Dallas real estate because it has a very diverse economy so there is a niche for people of every income level. It is estimated that 340 people move to Dallas-Fort Worth every day. Dallas has the lowest homeownership rate in the country, with renting more affordable than buying.
Dallas is a job hub. In the past decade, new jobs have created a land rush that has made North Texas one of the fastest-growing areas in the country. In 2018, 102,500 jobs were created here, and about 130,000 people moved to town. It is home to a large number of corporate headquarters, the city is a significant financial hub in the South of the USA.
Dallas’s local economy is a mix of aerospace, computer chips, telecommunications, transport, energy, and healthcare sectors and the Finance and Business Services. These sectors are all providers of good wages which allows for a strong market for Dallas investment properties.
Additionally, since 2014, 15 major tech companies have moved to Dallas, Texas bringing advancement and job growth in industrial and professional areas. These factors contribute to the immense growth of the Dallas real estate market. Tourism is on the rise in Dallas, Texas which promotes job growth in towns and neighborhoods within the area.
Some of the common points of attraction are the AT&T Stadium, Reunion Tower, and Book Depository. Dallas is becoming a hub for start-ups and IT companies, leading to an increase in investment in the Dallas real estate market.
Strong Dallas Rental Market
Texas has some of the best colleges in the country. And with the instrumental position held by the University of Texas, Dallas, and Northwestern State University, all students and eventual graduates are going to be in the rental market at some point. According to RentCafe, the average rent for an apartment in Dallas is $1,250, a 4% increase compared to the previous year. 216,192 or 42% of the households in Dallas, TX are renter-occupied while 289,624 or 57% are owner-occupied.
More than 80% of the apartments can be rented for less than $1500. If you buy an investment property in Dallas, there are statistics that there is no shortage of people looking for a place to live here, which means there is no dearth of prospective tenants for your Dallas investment property. The annual vacancy rate of rental properties in Dallas is very low as compared to other cities which is another good reason for investing in the Dallas real estate market.
According to RentCafe, Dallas’s average rent reached $1,270 in April, after a 1.5% increase since last year. Dallas apartment prices are below the national average of $1,417. The average rent for an apartment in Dallas rose slower than in other surrounding cities, such as Arlington ($1,093), where prices went up by 3.9%. Meanwhile, apartment rates in Fort Worth increased by 5%, reaching a $1,196 average.
Flower Mound is the priciest city for renters in the Dallas–Fort Worth area, with apartments renting for $1,599 per month. Frisco and its $1,497 average price are the second most expensive, while Farmers Branch comes in third, with a $1,459 rate. For renters in search of budget-friendly apartments, Greenville’s $891 average rent is the cheapest in the Dallas area, followed by Balch Springs’s $934 rate. Lancaster rentals are the third least pricey on the list, with a $1,031 average rent as of April.
The Zumper Dallas Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. The Texas one bedroom median rent was $1,176 last month. Frisco ranked as the most expensive city with one bedrooms priced at $1,580 while Arlington ranked as the most affordable city with one bedrooms priced at $1,110.
The best place to buy rental property is about finding growing markets. Cities like Richardson, Plano & Garland are good for investors looking to get started with rental property ownership at an affordable price. These trends provide a macro look at the growing rental demand. Each real estate market has its own unique supply-demand dynamics with unique neighborhoods that present their own opportunities for investors.
These cities look good for rental property investment this year as rents are growing over there.
The Fastest Growing Cities For Rents in DFW (Year-Over-Year)
- Denton rent was the fastest growing, up 18.1% since this time last year.
- Irving saw rent climb 13.1%, making it second.
- Garland was third with rent increasing 12.3%.
The Fastest Growing Cities For Rents in DFW (Month-Over-Month)
- Irving had the largest monthly rental growth rate, up 5.8%.
- Denton was second with rent increasing 3.3%.
- Euless ranked as third with rent climbing 2.4%.
Texas Real Estate Market: Investment Opportunities For 2023
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Dallas.
Consult with one of the investment counselors who can help build you a custom portfolio of Dallas turnkey properties. These are “Cash-Flow Rental Properties” located in some of the best neighborhoods of Dallas.
Not just limited to Dallas or Texas but you can also invest in some of the best real estate markets in the United States. All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Dallas turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
For a majority of investors, buying or selling real estate is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
Texas is a great market for real estate investing. If you have decided to invest in Dallas, you can either buy a fixer-upper or you may want to buy a Dallas investment property. This market offers a wide range of turnkey investment properties; you just have to find your tenants to rent out the property.
Good cash flow from Dallas investment property means the investment is, needless to say, profitable. On the other hand, a bad cash flow means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Dallas in a growing neighborhood would be key to your success.
When looking for real estate investment opportunities in Dallas or anywhere in the country, the generally accepted standard is to purchase a property that will give you a modest but minimum of 1% profit on your investment. An example would be: at $120,000 mortgage or investment cost, $1200 per month rental. That would be the ideal equation for example. Even with rent increases, buying a $500,000 investment property in Dallas is not going to get you $5000 per month on rent.
The three most important factors when buying real estate anywhere are location, location, and location. The location creates desirability. Desirability brings demand. There should be a natural and upcoming high demand for rental properties. Demand would raise the price of your Dallas investment property and you should be able to get a good return on your investment over the long term.
The neighborhoods in Dallas must be safe to live in and should have a low crime rate. The neighborhoods should be close to basic amenities, public services, schools, and shopping malls. A cheaper neighborhood in Dallas might not be the best place to live in. A cheaper neighborhood should be determined by these factors – Overall Cost Of Living, Rent To Income Ratio, and Median Home Value To Income Ratio.
It depends on how much you are looking to spend and if you are wanting smaller investment properties or larger deals in Class A neighborhoods. The inventory is low, but opportunities are there. Apart from Dallas, you can also invest in the housing market of Houston. Houston has a track record of being one of the best long-term real estate investments in the U.S. The Houston Real Estate Market forecast is good, and current housing prices are relatively low. The Houston metro area offers great opportunities for investors who are looking for a stable market that offers both cash flow and equity growth at a price that is STILL well below their replacement value.
The next one is the San Antonio real estate market. For those who want to invest in rental real estate, the San Antonio real estate market is an ideal location because of its outsized military presence. Fort Sam Houston is located inside the city limits. Lackland Air Force Base, Randolph Air Force Base, Camp Bullis, and Camp Stanley are located in the immediate vicinity. This means that there is a large population that will almost always rent because they don’t know where they’ll be sent on their next assignment.
San Antonio has a dearth of affordable housing because demand is so much greater than supply. This has created a large number of renters who need to pay quite a bit to rent apartments or single-family homes. We know there is a lack of housing relative to demand when a balanced market has a 6 month home inventory and San Antonio has only a two-month inventory.
The El Paso real estate market is another hot market to invest in. El Paso real estate market was ranked 4th in Trulia’s hottest real estate markets to watch in 2018. El Paso’s strong job growth, affordability, low vacancy rates, and high population of young households were pivotal in the ranking process. The cost of living in El Paso is lower than the national average, while the cost of housing is well below that of other major metropolitan areas, including Houston and Austin.
The Central, Cielo Vista, and Mesa Hills areas offer more affordable rental properties for sale, while neighborhoods in the northwestern and eastern parts of the metro area have some of the more expensive housing inventory. The amount residents spend on everyday expenses, such as food and transportation, is slightly less than what the average American pays.
The Austin housing market is one hot place to invest in Texas. It isn’t the largest in the state of Texas, but there are several reasons to consider buying real estate in this city. The Austin real estate market has gained a lot of steam, with home values almost doubling since 2010. The Austin real estate market isn’t as big as Dallas, San Antonio, or Houston. One of the long-term strengths of Austin is its diverse economy. The Austin real estate market dipped after the layoffs of the Dot-Com boom. They decided to solve the problem by encouraging medical and biotech employers to relocate to the area, too. As of this writing, there are 85 biotech and pharmaceutical companies in Austin.
Let us know which real estate markets in the United States you consider best for real estate investing!
Caveat emptor applies anywhere you buy property. Some of this article’s information came from referenced websites. Norada Real Estate Investments provides no explicit or implied claims, warranties, or guarantees that the material is accurate, trustworthy, or current. All information should be validated using the below references. Norada Real Estate Investments does not predict the future US housing market.