Homeownership Opportunities Erode Across North TX

Homeowners moving into a house | Image by Maria Korneeva/Getty Images

Nearly 30% of all single-family homes in the Dallas-Fort Worth metroplex cost between $300,000 and $400,000, pricing out most of the region’s would-be buyers, according to a new housing market report.

The MetroTex Association of Realtors report shows that the median home price for the DFW metroplex was $395,000 in March, a year-over-year increase of 1.3%.

For reference, the latest census data shows that the median household income for the Dallas-Fort Worth-Arlington metro area was $76,916 in 2021, well below the $121,398 needed to comfortably afford a home in the region, according to an analysis from Zillow. Even if the median household income were $88,826, as data from Zillow shows, it would still not be enough.

To put this into perspective, a household making the median income in DFW would need approximately 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.

Settling with a 10% down payment might speed up the timeline, but it does not necessarily improve affordability. Based on a 10% down payment, a DFW homebuyer must dedicate 41.5% of his income to monthly mortgage payments.

“Housing costs have soared over the past four years as drastic hikes in home prices, mortgage rates, and rent growth far outpaced wage gains,” said Orphe Divounguy, a senior economist at Zillow. “Buyers are getting creative to make a purchase pencil out, and long-distance movers are targeting less expensive and less competitive metros.”

According to the MetroTex report, DFW had exactly 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% fewer homes 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.

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