Almost 30% of all individual houses in the Dallas-Fort Worth area are priced between $300,000 and $400,000, making it unaffordable for most potential buyers in the region, as per a recent housing market report.
The MetroTex Association of Realtors report reveals that the typical home price for the DFW area was $395,000 in March, a 1.3% increase from the previous year.
For context, the most recent census information indicates that the mmedian household earnings for the Dallas-Fort Worth-Arlington metro region was $76,916 in 2021, significantly lower than the $121,398 required to comfortably afford a home in the area, according to a analysis from Zillow. Even if the median household income were $88,826, as data from Zillow shows, it would still not be enough.
To give an example, a household earning the median income in DFW would need roughly 8.4 years (based on Zillow’s median household income of $88,826) to save enough money for a competitive 20% down payment, up from 7.1 years in February 2020.
Opting for a 10% down payment might accelerate the process, but it does not necessarily enhance affordability. According to a 10% down payment, a DFW homebuyer must allocate 41.5% of their earnings to monthly mortgage payments.
“Housing costs have surged over the past four years as substantial increases in home prices, mortgage rates, and rent growth far exceeded wage growth,” said Orphe Divounguy, a senior economist at Zillow. “Buyers are finding innovative ways to make a purchase feasible, and long-distance movers are focusing on more affordable and less competitive metros.”
As per the MetroTex report, DFW had only three months of available inventory in March, a slight increase from 2.1 months a year earlier. Despite an uptick in housing supply and a 34% increase in monthly active listings, the general lack of affordability resulted in 7% led to fewer homes being sold during the month.
Even though mortgage rates easing from a 23-year high have helped reduce homebuyers’ financial burden, Divounguy said the key to improving affordability over the long term is to build more homes.
One potential solution to the local housing dilemma is a plan proposal in Forward Dallas 2.0, the Department of Planning and Urban Design’s long-range vision for how public and private land should be used, developed, and managed over time. The proposal is undergoing a draft review of future place types. After the map is finalized, it will go forward to public discussion and review.
One of the recommendations in the plan’s newest iteration is allowing high-density types like duplexes and triplexes to be integrated into single-family neighborhoods. Despite being a possible solution, many residents have expressed major concerns about the plan and its long-term impact on single-family neighborhoods, as reported by The Dallas Express.
By the time officials finally implement a solution, however, housing prices will likely be much higher than they are today. In fact, analysts with Capital Economics predict that additional tightening in the housing market could result in home prices climbing another 5% in 2024, Business Insider reported.
