Will the Dallas housing market collapse?

Texas has some of the fastest growing cities. For example, Austin's population increased by more than a fifth (21.7%) from 790,390 in 2010 to 961,855 in 2020. San Antonio's population increased by 8.1% over the same 10 years, from 1.33 million to 1.43 million. According to the 2020 Decennial Census, Houston's population grew by 9.8% from just under 2.1 million in 2010 to 2.3 million in 2020. As a result, Texas has several housing markets that have exploded in recent years.

We are now in the fourth quarter of 2023, with 2024 just around the corner, and Americans are faced with many uncertainties, including the possibility of a recession, not to mention the presidential election in November 2024. facing sexuality. We have analyzed several housing markets for her 2023. , including the Austin housing market, which may or may not be in the midst of a bubble. Here, we focus on the Dallas housing market in 2023, including 22 other major cities in the Dallas metropolitan area. We measure these housing markets by median sales price, number of homes sold, number of new listings, available inventory, median number of days homes are on the market before being snapped up, and the average number of homes sold. Sales ratio and percentage of active listings with price declines. All of this data comes from Redfin from August 2018 to August 2023 (the latest month for which data is available is his August 2023).

Read this article to find out what's happening in the Dallas housing market and the predictions for 2024.

Dallas Housing Market in 2023: An Overview

Based on an analysis of housing data obtained from Redfin, the Dallas metro area housing market is showing signs of home price normalization compared to overall trends in the pandemic and pre-pandemic years. The median sales price for homes in the Dallas metropolitan area reached a peak of $463,000 in May 2022. But by May 2023, that number had fallen 7.1% to a median sales price of $430,000. As of August 2023, the median sales price in the Dallas metropolitan area was $425,000, down just 1.1% from the August 2022 median sales price of $429,900.

Home prices in mainland Dallas also peaked in May 2022, with Dallas' median sales price reaching an all-time high of $488,000. Prices have fallen steadily since then, but the year-over-year decline in home prices has been modest rather than dramatic. From a median sales price of $405,000 in August 2022, prices fell just 1.3% to $399,900 in August 2023.

Broadly speaking, home prices in Dallas remain significantly higher than pre-pandemic levels. For example, the median sales price in Dallas in August 2018 was $292,250, and home prices continued to rise as the pandemic began. In March 2020, when the United States began to feel the full impact of the coronavirus pandemic, the median sales price in Dallas was $335,000, and in April 2020, it rose month-on-month to $340,000. It became. Dallas home prices have been on the rise since March 2020. Even in the off-season, the median sales price never fell below $300,000, as it did in January 2021, when it was $325,000. In fact, Dallas' 12-month average median sales price (September 2022 – August 2023) is $400,410.

Below is a graph detailing home price changes in Dallas, the Dallas metropolitan area, and the state of Texas as a whole.

Of the 24 major Dallas metropolitan housing markets we analyzed, 13 saw year-over-year home price increases from August 2022 to August 2023. The other nine cities saw declines, with the largest year-over-year declines. In University Park, the median sales price fell 34.4%, from $2,745,000 in August 2022 to $1,800,000 in August 2023. Meanwhile, the city of Coppell saw the biggest increase, with median sales prices increasing by 1%. 23.5%, from $558,000 in August 2022 to $689,000 in August 2023.

The table below details the year-over-year change in median sales price for all cities in the Dallas metropolitan area analyzed from August 2022 to August 2023. Cities are ranked in order of year-over-year increase. Lowest:

University Park, home of Southern Methodist University (hence its name), experienced the largest year-over-year decline, but its August 2023 median sale price of $1.8 million still fell below the August 2021 median sale price. higher than the value. It was $1,355,000. University Park achieved its highest median sale price in April 2023, reaching $2,835,000. The only other city in the Dallas metropolitan area to experience a double-digit decline in the housing market was Allen, where the median sales price went from $599,000 in August 2022 to $530,000 in August 2023. and fell 11.5%. However, Allen's median sales price remains favorable. That's above the August 2020 price ($360,000) and far above pre-pandemic prices, including August 2018, when the median sales price was $341,500.

Dallas housing market inventory continues to decline

Unlike many other housing markets in the United States, the Dallas housing market does not see a significant increase in available inventory. While it is true that housing inventory in mainland Dallas increased by 6.9% year over year, the number of units sold in the Dallas metropolitan area decreased from 14,580 units in August 2022 to 13,510 units, a 7.3% decrease. Below is a table of year-over-year changes in inventory in the greater Dallas housing market.

As you can see, available inventory is decreasing in the overwhelming majority of Dallas metropolitan housing markets. Typically, a decrease in available inventory causes an increase in home prices due to the laws of supply and demand, but this is not always the case in the Dallas housing market. For example, Louisville saw the largest year-over-year decline in available inventory, dropping by nearly two-fifths (39.3%), while median sales price decreased by 1.1% from August 2022 to August 2023. It only increased by %. Inventory decreased by 27.4%, but median sales price also decreased by 11.5% from August 2022 to August 2023.

Significantly, monthly home sales are also down in all but four cities, as inventory is down in most of Dallas' housing markets. Across the Dallas metropolitan area, monthly home sales decreased 10.4% from 6,141 units in August 2022 to 5,501 units in August 2023. In Mainland Dallas, monthly home sales decreased 20.6% year-over-year, while in Euless, monthly home sales decreased 20.6% year-over-year. available inventory decreased by 19% and monthly home sales decreased by 35.1% from August 2022 to August 2023.

Price declines slow in Dallas housing market

Another important metric when analyzing the housing market is the percentage of active properties that experience price declines. Again, the Dallas housing market compares favorably with many others in the U.S., such as the Seattle housing market and the Denver housing market, in that the share of active properties that have declined in value has decreased overall year over year. The housing market is different.

Last year, in the Dallas metropolitan area, 40.7% of active properties in August 2022 experienced a price decline. This number decreased slightly to 39.5% in August 2023. In the Dallas metropolitan area, the percentage of active properties with declining prices also decreased during the year. -YoY, 37.4% in August 2022 to 36.1% in August 2023. Despite the decline in monthly home sales in most of Dallas' housing markets, this has not translated into wider price declines.

The City of Grapevine has seen a significant decrease in the percentage of active properties with declining values. From 61.4% of active properties declining in value in August 2022, this figure plummeted by 51.9% and reached just 29.6% in August 2023. Meanwhile, Denton experienced a notable increase, with the proportion of active listings with price declines increasing by 39.5% from 36.4% of active listings in August 2022 to 50.8% of active listings in August 2023.

Homes for sale in the Dallas housing market stay on the market longer.

Another very useful metric for analyzing housing market activity is the length of time that homes for sale stay on the market before being snapped up. Redfin calls this metric days on market. This represents the median number of days a home for sale was on the market per month before being taken off the market. In the Dallas metropolitan area, the median number of days a home was on the market increased from 25 days in August 2022 to 33 days in August 2023, representing an annual increase of approximately 32%. To do. In Dallas, the year-over-year increase in median days on market was small at 26.1%, from 23 days on market in August 2022 to 29 days in August 2023. It became. In 20 of 24 cities analyzed in the Greater Dallas Housing Market, the number of days it takes for a home to go on the market before it is snapped up has increased.

Not surprisingly, the city with the largest year-over-year increase in days on market was Denton, which also had the largest increase in active listings with price declines. The median number of days on the market for homes in Denton increased by 78.9% from 19 days in August 2022 to 34 days in August 2023. Additionally, the median number of days homes were on the market in Denton is currently higher than both August 2020 and August 2020. In 2018, the median was 24 days. A similar trend was seen in Fort Worth, where the median number of days on market for a car was 32 days in August 2023, compared to 30 days in August 2018.

Conclusion of the Dallas housing market crash

As for the question of whether the Dallas housing market will collapse, the data seems to indicate that such an event is highly unlikely. Like many housing markets across the country, housing market activity has slowed in the Dallas housing market, but a complete collapse doesn't appear to be reflected in the data. A very important thing to note about today's American housing market is that the majority of today's homeowners took out their mortgages during the low federal funds rate of the 2010s. At the time, interest rates were being slashed across the board to stimulate recovery from the recession. global financial crisis. Therefore, a much smaller proportion of U.S. homeowners are likely to experience the level of repayment shock that occurred when adjustable-rate mortgages during the housing bubble were reset to new higher rates.

There are no obvious signs of a bubble in the data. As mentioned earlier, the majority of the Dallas housing market is not building up housing inventory. Many cities in the Dallas metropolitan area housing market have seen year-over-year declines in monthly home sales, but in most cases this is a long-term trend dating back to the pre-pandemic era of 2018. Most homes in the Dallas housing market sell for close to their original list price. Bubble-ridden housing markets typically see a significant increase in sales-to-listing ratios. This means the final selling price will be much higher than the original list price. In the Dallas housing market, most city sales ratios were slightly above 100% in August 2022, but a year later in August 2023, these sales ratios may have declined. However, it remains at a similar level. Up to 100%.