Dallas Real Estate Market Trends and Forecasting for 202112 Jan Jennifer Chonillo
As the largest metropolitan area in the state of Texas and home to more than 7.5 million people, the Dallas-Fort Worth metroplex has long been a dominant player in the Texas housing market.
Recently, Dallas has gained national attention thanks to a stellar job market, affordable living, and a wealth of cultural and entertainment opportunities. Home to big tech and a large collection of Fortune 500 companies, Dallas-Fort Worth has proven itself one of the best places to live, work, and play in 2021.
Dallas Housing Market Report
2020 has been described as a roller coaster year for the Dallas-Fort Worth Housing market. After a frightening lull during the initial quarantine in April, homes began selling rapidly again, thanks to historically low mortgage interest rates. The selling season during this unusual year did not slow down in September as it usually does, with numbers remaining high through the end of the year.
Like many other markets across the country, Dallas-Fort Worth is contending with a lack of housing inventory, creating a strong seller’s market and driving home prices up.
Throughout the year, the market has continued to recover from the shutdown and as of November 2020, both Dallas and Tarrant counties were reporting increases year over year from November 2019.
* The median price is up 13.6% to $280,000 in Dallas County. Tarrant County saw a 10.3% rise in median price to $265,000.
* Average days on market have slightly decreased to 39 for Dallas County and 32 for Tarrant County. Additionally, active listings are down 29.6% and 45% respectively.
* Tarrant County is down to a low 1.2 months of inventory and Dallas County is only slightly better at 2 months. A balanced real estate market should have an average of 6.5 months of inventory. This low inventory has led to sellers receiving offers above their listing price and many multiple offer situations.
* Closed sales for Dallas and Tarrant county have increased by 20% and 11.9% from November 2019.
DFW Real Estate Forecast for 2021
The Dallas-Fort Worth housing market is predicted to remain a seller’s market in 2021, with home values continuing to rise and historically low interest rates, which the Federal Reserve has no plans to raise, continuing to draw buyers to the market.
Zillow is estimating a further 11.1% percent increase in home values by November 2021. Similarly, Realtor.com is predicting a combined sales and price growth of 15.7% for the Dallas-Fort Worth-Arlington metroplex, ranking it number 22 in the list of 2021 Top Housing Markets.
Dallas-Fort Worth’s affordability and stable job market have made it a top destination for those looking to move from the more congested and expensive cities of the east and west coasts. This migration to the Lone Star State is reflected in the surprising number of new homeowners. In the Dallas suburb city of Frisco, nearly half (43.6%) of all homeowners have lived in their homes for less than 10 years, the highest percentage of new homeowners in the country.
With the migration of new Texans, low interest rates for buyers, and a continued low inventory of homes on the market, sellers can expect to continue to get top price for their home in 2021. Buyers in the Dallas-Forth Worth area should expect a very competitive market and prepare for multiple offer situations.
The Impact of COVID-19 On the Market
The initial impact of the COVID-19 shutdowns was felt in April, with a freeze on in-person showings and a fast cooling market that had many in the industry concerned for the rest of the year. Metroplex Association of Realtors reported an alarming 35% drop year over year for residential sales in May.
The Dallas-Fort Worth job market was also badly affected. The US Bureau of Labor Statistics reported that employment in the Dallas-Fort Worth-Arlington Metroplex decreased by 96,100 jobs in 2020, with the leisure and hospitality industry being the hardest hit.
Concerns over possible job loss and having strangers in their homes led many potential sellers to elect not to sell in 2020, leading to a very low inventory for the Dallas-Fort Worth area. The same cannot be said for buyers, with the number climbing quickly back up in June and leading to a very competitive seller’s market. D Magazine reported that in June 2020, six out of ten houses on the market were receiving multiple offers.
While buyer demand did not decrease, the pandemic did affect what buyers were looking for. A nationwide shift towards working and learning from home led many to value the amenities of the home itself over its location.
The freedom to live anywhere has also led many in more crowded and expensive markets like California to seek out Texas cities, and Dallas in particular, for its relative affordability and better housing opportunities. There is also a draw from the denser urban areas out to suburban communities.
Population Growth in DFW
Despite the 2020 shutdowns and job losses, migration to the Dallas-Fort Worth area is still going strong. Business Insider reported a net migration of 686,884 people to the Dallas-Fort Worth-Arlington metroplex between 2010 and 2019. This is the highest number of new residents for any US metro area during that time. Reporting firm Cushman & Wakefield is predicting a further 1,393,623 people will move to the area by 2029, swelling the population of the metroplex to 9 million by 2030.
One of the factors fueling this increase is the migration of companies to Texas. Dallas-Fort Worth is now home to the corporate headquarters of 24 Fortune 500 companies and three Fortune 10 companies, more than any other city in the nation. Additionally, a number of large companies have expanded into Dallas-Fort Worth, including Uber, Salesforce, USAA, and Microsoft.
With these companies come new jobs, a total of 128,000 between 2017 and 2019, which was higher than the job growth of 47 states for that same time period. While the Dallas-Fort Worth job market did see losses in 2020, the continued migration of companies to the area is expected to continue.
This migration of people to the Dallas-Fort Worth- Arlington Metroplex will mean an even greater demand for housing and could lead to even more rapidly rising home prices due to low inventory. While Dallas-Fort Worth is not currently facing housing shortages to the extent found in Austin, the numbers are creeping in that direction.
Is the DFW Market Cooling Down As Predicted?
In 2019, many experts predicted that the Dallas-Fort Worth housing market would begin cooling down in 2020. Thanks to a year no one could predict, this cool down did not materialize. Home prices and sales continued to rise throughout 2020 and that climb is expected to continue through 2021, though potentially not at the meteoric rate of previous years.
Home sales are on the rise across the country. Thanks to months of quarantine and a national movement towards working from home, people are more invested in their home space. Realtor.com is reporting that, although inventory remains low, it will see a slow increase over the coming year, which will slow the rising home prices as supply and demand become more balanced.
There is concern among experts over the long term sustainability of Dallas-Fort Worth’s ever-rising home prices. Fitch Ratings published a report in October 2020 stating that homes in the Dallas-Fort Worth-Arlington Metroplex are overvalued by 15%- 19%, thanks to historically low inventories of available homes coupled with steady demand. Homes sold in the Dallas- Fort Worth area have seen a 40% increase in sales price over the last 5 years.
Price correction may be in the future for the Dallas-Fort Worth housing market, but most experts agree it will not happen in 2021.
Should You Invest in the DFW Market in 2021?
Despite the setbacks of the previous year, Dallas-Fort Worth is still growing. The national pandemic did deal a blow to the job market, with a loss of 96,100 jobs and 3,200 local businesses closing. Dallas is still attractive to investors, thanks to steady and strong population growth, affordable home prices when compared to the national average, and a strong rental market.
Affordable Real Estate in Dallas
In 2019, Lending Tree rated Dallas the second most affordable housing market for middle-class families. While home prices in the Dallas-Fort Worth area have seen a rapid rise since then, they are still well below the national average.
The median home price for homes in the Dallas-Fort Worth-Arlington metroplex in the third quarter of 2020 was $294,200, nearly five percent lower than the national average of $309,100. Dallas shines even brighter when compared to other major metro areas. As an example, the median home price for the San Francisco metro area during the same time period was $1,125,000 and in Boston, it was $588,100.
Best Suburbs to Buy a Home
As the trend towards suburban and rural living continues into 2021, it’s important to choose a suburban community wisely. Here are the top 10 Best Suburbs to Buy a House in the Dallas-Fort Worth area, as reported by Niche. Criteria for this list include home values, property taxes, housing costs, and real estate trends.
DFW Neighborhoods Worth Watching
Home values are rising throughout the Dallas-Fort Worth-Arlington Metropolitan area, but there are areas where buyers are guaranteed the greatest return on investment. Neighborhood Scout reported the 10 Dallas and Fort Worth neighborhoods with the greatest appreciation since 2000.
* Ross Ave / Crockett St
* Canada Dr / Vilbig Rd
* S Lamar St / Corinth St
* N Hampton Rd / Singleton Blvd
* City Center
* Gannon Ln / S Westmoreland Rd
* Commerce St / Main St
* S Vernon Ave / S Tyler St
* Vinewood Dr / N Buckner Blvd
* Kings Hwy / N Montclair Ave
Fort Worth Neighborhoods
* Hemphill St / W Allen Ave
* Hemphill St / W Berry St
* The College of Saint Thomas More / W Berry St
* Alta Dr / W 7th St
* Hemphill St / Pennsylvania Ave
* N Forest Park Blvd / W 7th St
* White Settlement Rd / Foch St
* 8th Ave / W Rosedale St
* Montgomery St / Bryce Ave
* U of North Texas Health Science Center / White Settlement Rd
The future of the Dallas-Fort Worth housing market is looking bright, supported by a recovering job market and a strong continued population growth. Expect continued rising home prices and low inventory levels throughout the next year. If you are ready to look for a home in the Dallas-Fort Worth area, visit us at BHGRE HomeCity to get started.