The Dallas-Fort Worth (DFW) housing market and economy have been on quite the rollercoaster the past year. On the one hand, we have home prices hitting historic highs; on the other hand, we recently had mortgage rates significantly surpassing the lows of 2021. Combined with the unstable economy and inflation, homebuyers may be reluctant to purchase right now, opting to wait until it stabilizes again. Let’s take a look at the market change and forecast for Dallas-Fort Worth (DFW) real estate.
Positive Upward Trend For Dallas-Fort Worth
The good news for Dallas-Fort Worth (DFW) is that people are still flocking here and need a home to hang their hats. The great exodus of California businesses and residents moving to Texas continues, as well as folks from all over the country. Despite the economic turmoil in the United States, Texas continues to be one of the country's top ten most stable housing markets. Population growth drives the demand for housing, so new homes are popping up fast.
DFW is currently experiencing relief in the inventory of new homes as the supply of homes for sale reached almost three times the number it was four months ago. As of June 2022, there were just over 11,000 active home listings on the DFW market. That is an upward trend from February 2022, which was a significant low of just over 4,000 active listings in the DFW market.
Recovering From A Pandemic
The Dallas-Fort Worth (DFW) housing market has been experiencing tighter supply conditions for years, but the conditions have worsened over the past few years. During the second half of 2020 and all through 2021, inventory levels dropped in the DFW housing market. This was primarily due to the pandemic’s nationwide impact on home-buying activity.
New data suggests that the U.S. housing market hit a turnaround in its supply struggles in May 2022. This was the first year-over-year increase since June 2019. And while the inventory remains low by historical standards nationwide, the number of homes for sale has risen. The slower sales pace resulted in more homes staying on the market longer.
The Impact Of Higher Mortgage Rates in Dallas-Fort Worth
New listing activity continues to lag behind more recent years in most of the U.S. The higher mortgage rates are playing a significant role. And while mortgage rates are not the only reason homeowners decide to move, they factor into the equation quite a bit. The prospect of giving up their current low mortgage rate to purchase a new home with a mortgage rate nearly double their current one is enough to make one reluctant.
While higher mortgage rates have driven many buyers out of the North Texas housing market, home prices still soared in June. In fact, home prices soared in DFW more than in other U.S. metros. In fact, the median home price in DFW reached $426,000 in June2022, up 29.3% from $329,500 in June 2021. U.S. home prices were up 11% from a year ago.
According to Zillow, the median home value for the DFW area rose by 30% in the past 12 months alone. The supply shortage is driving much of the price escalation. However, a recent report by Realtor.com’s research team found an increase in the listing of new homes that recently came onto the market. These findings show that new home listings within the DFW housing market rose by 18% over the last year or so. That’s encouraging news for buyers planning to buy a home in DFW later this year!
A higher percentage of DFW sellers have also been reducing their asking prices lately. In May 2022, the percentage of property listings with an asking price reduction increased to 9.4%. The year before, price reductions were basically non-existent. Due to the ongoing supply shortage, it remains a seller's market in DFW. The trend appears to be shifting more in a buyer-friendly direction. However, home prices will most likely continue to increase. It may get easier to find a home in the DFW area to purchase, but there will be a sense of urgency.
Forecast And Outlook For The Future Of Residential Real Estate
While no one can truly predict future real estate trends with total accuracy, economists and housing analysts can offer some easy predictions based on current trends. For example, home pricing growth is expected to slow down in the coming months. There is already evidence of this in some major metros.
There is an expectation of longer listing periods due to a less frenzied pace in the real estate market. The typical time on the market for home listings will increase as we enter the second half of 2022 and enter 2023.
Commercial Real Estate Trends For Dallas-Fort Worth
One of the most significant reasons people are migrating to Texas, particularly the DFW metro areas, is because their company moved there or they are looking for more job opportunities. DFW is known to be the mecca of many large corporate headquarters. There are plenty of large warehouses and shipping centers because Texas is located centrally in the United States. And don’t forget many of California’s Silicon Valley have migrated to Texas. With more businesses coming to DFW, there is more need for commercial real estate and office buildings for purchase and rent. It’s also created an opportunity for investment properties.
Medical Office Building Growth Continues
DFW has been leading the nation in medical office growth for a few years now. In fact, since the pandemic, medical office buildings have been gaining increased attention from investors and developers. According to CommercialEdge, there were more than 16 million square feet of properties under construction in the spring of 2022, including medical office space in at least some capacity. The demand for medical office buildings will continue to grow in the future, which will increase investment deals.
The New Way Of Working
During the pandemic, many office buildings sat empty while employees worked remotely from home. In 2022, many companies are returning employees to their offices. Some companies are doing a hybrid work schedule to allow social distancing to continue with fewer employees in the office at a time. It will enable the best of both worlds, working from the privacy of your own home while going into the office to maintain the workplace culture.
The purpose of office space has changed as more companies adapt to this new way of working. Building owners partner with their tenants to create workplaces that keep employees healthy and productive. Companies want the physical design to allow for flexible open spaces, flexible lease terms, and sustainable building features. They are looking for workspaces that promote wellness, such as indoor air quality filters and plenty of outdoor space for meals and breaks. Having food and beverages readily available in the building is a bonus as it allows employees to avoid traveling to eateries and restaurants during meal breaks.
Retail Stores Coming To Dallas-Fort Worth
One of Texas natives' favorite places to shop for essentials is H-E-B. The company is bringing two new stores to the DFW area. Plano and Frisco are welcoming their very own H-E-B stores in the fall of 2022. New stores mean more job openings in these two communities.
In Closing
While the DFW real estate market has had its highs and lows over the past few years, we continue to be a thriving market with a promising future.
What are your takeaways about the DFW market and forecast?
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