Will The Dallas Housing Market Crash?

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Texas is home to several rapidly growing cities, such as Austin whose population rose by more than a fifth (21.7%) from 2010’s 790,390 to 2020’s 961,855; San Antonio whose population rose by 8.1% over the same 10-year period, from 1.33 million to 1.43 million; and Houston whose population rose by 9.8%, from just under 2.1 million in 2010 to 2.3 million in 2020, according to the 2020 Decennial Census. Texas has several housing markets which have seen a boom in activity over the past few years. We have been studying several housing markets for 2023. This includes the Austin housing market which could be experiencing a housing bubble. We’re now focusing on the Dallas housing markets in 2023. This includes 22 other major cities within the Dallas metro area. All this data was sourced from Redfin, for August 2018 through August 2023 (August 2023 being the most recent month that data is available). All this data was sourced from Redfin, from August 2018 through August 2023 (August 2023 being the most recent month for which data is available).

Read on to find out what’s going on with the Dallas housing market and predictions for 2024.

Dallas Housing Market 2023: Overview

After analyzing housing data sourced from Redfin, the Dallas metro area housing market is showing signs of a normalization in home prices compared with the overall trends of the pandemic years and pre-pandemic years. Dallas housing market 2023: Overview

After analyzing housing data sourced from Redfin, the Dallas metro area housing market is showing signs of a normalization in home prices compared to overall trends during pandemic years and pre-pandemic years. By May 2023 that price had fallen by 7.1% to $430,000. In August 2023, Dallas’ median sale price was $425,000. This is only a 1.1% decrease from the $429,900.00 median price in August 2022. Prices have steadily declined since then. However, the decline has been gradual and not dramatic. From a median price of $105,000 per home in August of 2022, the prices dropped by just 1.3% to reach $399,900 for August of 2023. In August 2018, for example, the median home price in Dallas stood at $292.250. Home prices rose with the outbreak of the pandemic. When the U.S. began to feel the effects of the Covid-19 Pandemic in March 2020, the median price in Dallas was $335,000. This increased even month-over-month in April 2020 to $340,000. Dallas home prices have not fallen below $300,000. This is true even in off-season months like January 2021, when the median price was $325,000. Indeed, the 12-month average median sale price (September 2022-August 2023) in Dallas is $400,410.

Below is a chart detailing the changes in home prices for Dallas, the Dallas metro area, and Texas overall:

Out of the 24 major cities in the greater Dallas housing market we analyzed, 13 of them witnessed home prices increase year-over-year from August 2022 to August 2023. University Park saw the largest decrease in the median sale price from August 2022 to August 2023. The drop was 34.4%. Coppell saw the biggest increase in its median sale price, rising from $558,000 to $689,000 from August 20,22 to 2023. The cities are ranked in order of the highest year-over-year increase to the lowest:

University Park, which is home to Southern Methodist University (hence the name), experienced the greatest year-over-year decline, but its median sale price of $1.8 million in August 2023 is still higher than its median price in August 2021, when it was $1.355 million. University Park’s highest median sale price was $2.835m in April 2023. Allen was the only city in greater Dallas to see a decline of double digits, with the median sale price falling by 11.5% from $599,000 to $530,000 between August 2022 and August 2023. However, Allen’s median sale price is still well above where it stood in August 2020 — $360,000 — and well above where it stood in pre-pandemic days, such as August 2018, when its median sale price was $341,500.

Inventory in the Dallas Housing Market Continues to Dwindle

Unlike many other housing markets in the U.S., the Dallas housing market has not witnessed a major build-up in its available inventory. Dallas’ housing inventory has increased by 6.9% in the last year, but the Dallas metro has declined 7.3%. From 14,580 houses for sale in August of 2022 to 13,510 in August of 2023. Here is a chart of the change in housing inventory from August 2022 to August 2023 in the greater Dallas market. In most cases, a decrease in inventory leads to an increase in home prices because of the laws supply and demand. However, this is not always the case in the Dallas housing markets. In Lewisville, for example, the available inventory fell by almost two-fifths (39.5%), but its median sale price rose only by 1.1% between August 2022 and August 2023. As inventory declined across the Dallas housing market in general, it was also reflected in the monthly sales in all but four cities. Dallas’ metro area saw a 10.4% drop in monthly home sales, going from 6,141 in august 2022 to only 5,501 in august 2023. In Dallas proper, monthly home sales fell by 20.6% year-over-year, while Euless, which experienced a 19% decrease in available inventory, saw its monthly home sales fall by 35.1% from August 2022 to August 2023.

Price Drops Have Decreased in the Dallas Housing Market

Another important metric when analyzing housing markets is the percentage of active listings that experienced price drops. Dallas’ housing market differs from many other housing markets in the U.S. in that it has seen a decline in active listings that have experienced price reductions. This number decreased slightly to 39.5% by August 2023. The percentage of active listings that have price reductions also decreased in the city of Dallas, from 37.4% to 36.1%. The city of Grapevine saw a dramatic drop in the percentage of active listings that had price reductions. From 61.4% in August of 2022 to a mere 29,6% in August of 2023. On the other hand, Denton experienced a notable increase, with the share of active listings with price drops rising by 39.5%, from 36.4% of active listings in August 2022 to 50.8% of active listings in August 2023.

Houses for Sale in the Dallas Housing Market Are Staying on the Market Longer

Another very useful metric for analyzing housing market activity is the length of time a home for sale spends on the market before getting bought up. Redfin calls this measure days on the market. It represents the median monthly days a house for sale spends on the market before it is taken off. In the Dallas metro region, the median days on the market for a home was increased from 25 days in august 2022 to 33 in August 2023. This is an increase of approximately 32% per year. Dallas itself saw a smaller increase of 26.1% in median days on the market, from 23 days in August to 29 in August. Twenty out of the 24 cities studied in the greater Dallas area experienced an increase in how long a house for sale is on the market before it’s sold. Denton’s median days on the market rose by 78.9% from 19 days in august 2022 to 34 in august 2023. Denton’s median days on the market now surpasses both August 2020 and 2018 when it was 24 days. Fort Worth also saw the same trend, with a median day on market in August 2023 of 32 compared to the 30 days of August 2018. Dallas’ housing market, like many others in the U.S. has seen a moderated housing market, but the data does not reflect an outright crash. The fact that most current American homeowners obtained their mortgages in the 2010s – a time of extremely low interest rates – is a very important thing to remember about the housing market. The data does not show any signs of a housing bubble. The vast majority of Dallas’ housing market hasn’t seen an increase in housing stock. Although many cities within the greater Dallas housing markets experienced a decline in monthly home sales from one year to the next, this trend has been going on for a long time, dating back to before the pandemic in 2018. In addition, the majority of homes in Dallas are selling for prices close to their initial list price. In a housing bubble, the ratio of sales to list price will rise significantly. This means that the final price of the sale is higher than the original price. In August 2022 in the Dallas housing market most cities had a sales-to list ratio that was only slightly over 100%. A year later in August 2023 these ratios might have dropped but still be close to 100.