DFW Ranked No.2 Real Estate Market to Watch

Dallas Skyline at Dusk | Image by Shutterstock

Dallas-Fort Worth remains one of the country’s most attractive real estate markets, ranking No.2 among “must-watch markets” heading into 2023, according to a recent report.

The Urban Land Institute (ULI), in connection with PricewaterhouseCoopers, released its annual Emerging Trends in Real Estate (ETRE) report in October, ranking DFW second on a list of top U.S. markets to watch in 2023, based on overall real estate prospects. The ULI ranked Nashville No.1.

Data compiled for the report was based on surveys and interviews with industry professionals, such as investors, fund managers, developers, property companies, lenders, brokers, advisors, and consultants.

The report provides an “outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the United States and Canada.”

The surge of demand for Texas real estate has spread to all corners of the state, despite evidence of decelerating or “normalizing” prices and slowing housing demand due to record-high mortgage rates.

“Almost every market in the country received lower ratings for both investment and development prospects this year, illustrating that outlooks are darkening just about everywhere following the brief post-COVID exuberance shown in last year’s survey across a variety of metrics,” the report said.

DFW (No.2) was not the only Texas metroplex to achieve a top 15 ranking. Austin (No.4), San Antonio (No.12), and Houston (No.14) were all listed as top real estate markets to keep an eye on next year.

“These markets are large and diverse but still affordable, forming powerhouse economies that attract a wide range of businesses,” according to the ETRE report. “Despite their large population bases, most are among the fastest-growing markets in the United States. Moreover, their economic performance has been solid through thick and thin.”

The report highlights the dominance of “magnet” markets — migration destinations for both people and companies. This group grew faster than the U.S. average in terms of population and jobs. In addition, magnet markets are preferred by investors and builders and are typically found in warmer Sun Belt regions.

Magnet markets have the highest average “Overall Real Estate Prospects” rating of any group in the ETRE survey. DFW, Austin, San Antonio, and Houston are all considered magnet markets.

The ULI further categorized magnet markets into separate subgroups, including “Super Sun Belt,” “18-Hour Cities,” and “Supernovas.”

Austin is the only aforementioned Texas market to be excluded from the “Super Sun Belt” subgroup. Instead, Austin is classified as a real estate “Supernova,” defined as a smaller metro area (1 to 2 million residents) that has exploded into prominence over the past decade. Supernovas are considered to have tremendous and sustained population and job growth.

In fact, Austin has the highest investor demand of any market in the country. Dallas, which also boasts strong investor demand, ranked two spots below Austin. In terms of the strongest local economies among the markets studied, Dallas ranked No.2 while Austin took the No.1 spot.

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