A lot can change in four years, and no area in Dallas may be more severely affected than housing costs.
The income needed to afford a comfortable home in Dallas has increased by $53,679 since January 2020, according to an analysis by real estate and rental platform Zillow Group Inc.
This brings the income required to purchase a typical home to $121,398, compared to an estimated $366,690 in the North Texas metropolitan area. Zillow estimates that it would take about 8.3 years to save up a down payment on such a property, and buyers can expect a mortgage of about $2,340 at current interest rates.
Zillow used the Home Value Index in its analysis and obtained median household income from the American Community Survey. For the mortgage payment, Zillow included principal and interest, as well as estimated taxes and insurance on the 10% down payment.
Nationwide, homebuyers need an income of $106,000 or more to afford a home, a Zillow study found, an 80% increase from $59,000 in 2020. Monthly mortgage payments for a typical home have doubled since 2020.
Zillow's four-year analysis depicts the pre- and post-pandemic realities of Dallas' housing market, defined by soaring home prices and exacerbated by rising interest rates.
The rise in house prices resulted from pure demand for real estate.
In 2020 and 2021, the region saw a trend of homebuyers moving into larger homes with home office space in response to the realities of COVID-19. Added to this was a population explosion due to migration from other states.
The population of the Dallas-Fort Worth metropolitan area topped 8 million last year, according to estimates from the Texas Demographic Center. The D-FW region accounted for 36% of the state's population growth from 2020 to 2022, adding approximately 423,000 people during this period.
Bank of America's Allen Seelenbinder describes Texas as a “unique animal” compared to other parts of the central United States.
Over the past few years, he said, more potential people have been moving to Texas, including people looking for a base to work remotely, as well as people looking for more room or moving to Texas. He said that the city is attracting different types of home buyers.
“We have buyers competing with people in California, Delaware, and Oregon. Texas affordability is much better than those areas and is below historical market prices, which is driving prices up.” ,” said Seelenbinder, divisional sales manager for the Charlotte-based bank.
“If you see housing in your neighborhood have increased by 40% in seven years, it may not seem affordable, but if you come from an area that has increased by 110% in the same period, it may be more affordable for them. “He said it was a good price,” he said. .
Renting may seem more affordable when you consider the cost of a mortgage, but for properties with two or more bedrooms, the lease price is not that different from a mortgage. Zillow estimates his March median rent for his two-bedroom property in Dallas at $2,100.
Seelenbinder said the market is starting to plateau compared to the breakneck pace from 2020 to 2022.
“Right now we're not in a time where you're going to get 40 offers on the same property the same day it goes on the market,” he said. “If homebuyers are prepared and understand what's important to them and where they can afford in their personal finances, they can make educated decisions and avoid making impulse purchases. It is not.”
While new income standards raise affordability issues in the Dallas area, there are several programs in the public and private sectors that can help buyers purchase real estate.
Dallas residents can assess their eligibility within the Dallas Home Buyer Assistance Program, an initiative funded by the U.S. Department of Housing and Urban Development.
Through the Texas Department of Housing and Community Affairs, the Texas Home Buyer Program can assist with down payment assistance for first-time homebuyers or former homeowners who have not owned a home for three years.
Financial institutions like Bank of America offer buyer assistance programs such as down payment subsidies, but would-be homeowners typically have to use the bank's mortgage services to qualify. is needed.
“It's very important to be patient because all buyers need to know a lot about their desired field, their personal financial situation, and find what's best for them,” says Schierenbinder. “It's important,” he said.
