2021 Dallas Real Estate Market Investing Forecast
This market forecast includes data from Dallas data and surrounding areas including Fort Worth, Arlington and more.
Why should you consider Dallas for real estate investment?
Dallas itself may not be the largest housing market in the country, but when you join forces in the neighboring cities of Fort Worth and Arlington, you get a huge metropolitan area of over 7.5 million – which is just New York City’s population.
The area – known as “DFW” to most locals – is a sprawling 8,600 square miles slice of culture, industry, and education. It is home to some of the world’s largest defense manufacturers, renowned oil and gas companies, and a number of world-class universities and colleges, including Texas Christian University, Southern Methodist University, University of North Texas, and more.
Are you considering investing in real estate in the Dallas area? Here’s what you need to know about the 2021 market.
The state of the market
Dallas is currently recovering from the pandemic. Unfortunately, while many of the real estate market indicators are improving, there are some key issues that could hold the city – and those looking to invest there – back.
Here are the top three trends we’re seeing in the Dallas-Fort Worth area right now:
- Supply is a problem.
- Rents are not in great demand.
- Prices are increasing for both rentals and single-family homes.
1. Supply is a problem. This sounds like a disposable item (after all, supply is a problem everywhere these days), but it’s especially bad at DFW.
The current housing supply is not only at record lows, but is also below the national average. To make matters worse, there is not much hope to be seen on the horizon. The building permits have expired, the builders’ trust is dwindling and construction is becoming more expensive. The only bright spot is the apartment building, where approval activities have increased significantly in the last month.
2. Rents are not in great demand. Vacancies in Dallas were everywhere: up, down, and then up again. But right now? At 8.4%, they are well above the national average.
As more multi-family units are built (see above about data allowing multi-family units) ask yourself: who will live in all of these additional units?
3. Prices are rising – both for rents and for single-family homes. Like most real estate markets in the country, rents and property prices are rising in Dallas. Houses are almost 12% more expensive than a year ago and rents are almost 3% higher.
Both fall below the national trendline for now, but they are some of the most expensive when compared to other Texan markets (except Austin). For investors, this is cause for optimism – especially those with rental properties in mind (or those looking to sell a home in the short term).
Indicators of demand for residential real estate in Dallas
Charts courtesy of Housing Tides, an EnergyLogic company.
Demand in the Dallas area is likely to weaken this year as many of the region’s key indicators are trending lower. Although the region adds a healthy number of households each year, consumer sentiment and employment are falling. In view of rising rental and property prices, this could dampen demand in the coming months. Overall, our data shows that most of the demand indicators in Dallas are “unhealthy” and “weaker”.
As in many cities in the United States, unemployment has risen in Dallas. The current unemployment rate in DFW is 6.5%, an improvement on the rate of 12.8% recorded almost a year ago, but which is above the current national average of 6.3%.
The region lost around 116,000 jobs last year. Job losses had steadily decreased between April and December, but increased slightly in January. Even so, they’re still a big improvement on the 400,000 jobs lost last March.