What is the Housing Market Like in Dallas, TX?


Homebuyers shut out of the Dallas real estate market by high prices likely won’t see relief for at least another year. Overall, Dallas’s housing market is booming with a 20% year-over-year increase in average home prices from 2020 to 2021. This growth is unprecedented in its history, and will likely last at least another year.

Since the height of the summer busy season, the housing market in Texas has slowed slightly. However, this is a natural part of our annual attrition cycle going into the fourth quarter. From September to August, contract signings slowed by 2.3%. Even more notable is the 8% slowdown in the market from this time last year.

Some financial analysts are expecting an overall slowdown in the Dallas real estate market late next year. Roughly one third of the members of the U.S. Central Bank’s policy setters say they expect to raise the interest rate in the fourth quarter of 2022. Another third expect the rate to rise during the first quarter of 2023. Everyone agrees that there’s going to be a slowdown, but we’ve got at least one more really hot year for real estate before prices normalize.

Most real estate professionals agree that this summer is going to be very hot for the Dallas-Forth Worth market, and home prices are expected to exceed the 20% growth rate we’ve experienced in the last year. The average credit score in Texas rose to 752 while the debt-to-income ratio fell to 35.8. The middle class is better off than in previous years. When paired with low interest rates, it’s no wonder the housing market is booming.

Even with the cost of living rising, more than 60% of home buyers are offering more than sellers are asking before they even tour the property. The number of homes selling without an inspection doubled between 2020 and 2021, meaning cash buyers are active right now. The average home mortgage is covering more than 85% of the cost of the home right now.

The supply of available homes priced at $200,000 or less is exceptionally low, and the demand for affordable single-family homes is very high. The average home value in Texas is $302,400 and $374,000 in Dallas Forth Worth. The $400,000 homes are selling at a faster rate than ever before. When we see a slowdown in the market, it’s because the available home’s supply is constrained. There are inflationary pressures making it harder for households to afford to live, but those pressures affect lower-class families much more than middle or supper class homebuyers.

Houses are selling very quickly in Dallas right now, and the average listing is sold in 20 days. There are only enough homes on the market to last 1.2 months at the current rate of sales. The low supply of available houses and the cost of building a new home are what are holding parts of the real estate market back right now. The cost of building a home dropped slightly in the third quarter thanks to lower lumber prices, but single-family housing permits still fell to 3,389 per month in August. Other residential construction material prices are still very high, and rapid growth isn’t expected for new home construction any time soon.

While single-family home starts are low right now, five or more-unit multifamily housing is up 22.6% year to date. Investors are building multifamily apartment complexes to fill the need for rental housing in Dallas and Fort Worth.

If you’re in the market for a home, you’re more than likely going to need a mortgage. Potempa Team has served customers’ banking needs in Dallas for more than 25 years. We’ve made more than $1 billion worth of home mortgages to clients this year. Speak with a mortgage specialist or apply for a mortgage today.

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