Will The Dallas Housing Market Crash?

Texas is home to several rapidly growing cities, such as Austin whose population rose by more than a fifth (21.7%) from 2010’s 790,390 to 2020’s 961,855; San Antonio whose population rose by 8.1% over the same 10-year period, from 1.33 million to 1.43 million; and Houston whose population rose by 9.8%, from just under 2.1 million in 2010 to 2.3 million in 2020, according to the 2020 Decennial Census. As such, Texas is also home to several housing markets that have exploded with activity in recent years.

Now, entering the fourth quarter of 2023 and with the year 2024 on the horizon, Americans face many uncertainties, including the potential of an economic recession, not to mention a presidential election come November 2024. We’ve been analyzing several housing markets in 2023, including the Austin housing market, which may or may not be in the midst of a bubble. Here, we’re focusing our attention on the Dallas housing market in 2023, including 22 other major cities in the Dallas metro area. We analyzed these housing markets in terms of their median sale price, number of home sales, number of new listings, available inventory, the median number of days on market a home spends before being bought up, sales-to-list ratio, and the percentage of active listings that experienced price drops. All this data was sourced from Redfin, from August 2018 through August 2023 (August 2023 being the most recent month for which data is available).

Read on to find out what’s going on with the Dallas housing market and predictions for 2024.

Dallas Housing Market 2023: Overview

After analyzing housing data sourced from Redfin, the Dallas metro area housing market is showing signs of a normalization in home prices compared with the overall trends of the pandemic years and pre-pandemic years. The median sale price for a home in the Dallas metro area reached a peak of $463,000 in May 2022. However, by May 2023, that figure had dropped by 7.1%, to a median sale price of $430,000. As of August 2023, the median sale price in the Dallas metro area was $425,000, which is down only 1.1% from August 2022’s median price of $429,900.

In the city of Dallas proper, home prices also peaked in May 2022, when the Dallas median sale price reached an all-time high of $488,000. Since then, prices have declined steadily, yet the year-over-year decline in home prices has been slight rather than dramatic: From a median sale price of $105,000 in August 2022, prices decreased by only 1.3%, reaching $399,900 in August 2023.

In the grand scheme of things, Dallas home prices remain markedly higher than their pre-pandemic levels. For example, in August 2018, the median sale price in Dallas was $292,250, and home prices continued to rise with the onset of the pandemic. In March 2020, when the U.S. really began feeling the impact of the Covid-19 pandemic, the median sale price in Dallas stood at $335,000 and even increased month-over-month to $340,000 in April 2020. Since March 2020, home prices in Dallas have never fallen below $300,000, even during off-season months, like in January 2021 when the median sale price was $325,000. Indeed, the 12-month average median sale price (September 2022-August 2023) in Dallas is $400,410.

Below is a chart detailing the changes in home prices for Dallas, the Dallas metro area, and Texas overall:

Out of the 24 major cities in the greater Dallas housing market we analyzed, 13 of them witnessed home prices increase year-over-year from August 2022 to August 2023. The other nine cities experienced declines, with the maximum year-over-year decrease being University Park, where the median sale price fell by 34.4%: From $2,745,000 in August 2022, down to $1,800,000 in August 2023. The biggest increase, on the other hand, was the city of Coppell, which saw its median sale price rise by 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 sale prices in all the cities of the Dallas metro area we analyzed, from August 2022 to August 2023. The cities are ranked in order of the highest year-over-year increase to the lowest:

University Park, which is home to Southern Methodist University (hence the name), experienced the greatest year-over-year decline, but its median sale price of $1.8 million in August 2023 is still higher than its median price in August 2021, when it was $1.355 million. University Park achieved its highest median sale price in April 2023, when it reached $2.835 million. The only other city in the greater Dallas housing market to experience a double-digit decline was Allen, where the median sale price fell by 11.5%, from $599,000 in August 2022 to $530,000 in August 2023. However, Allen’s median sale price is still well above where it stood in August 2020 — $360,000 — and well above where it stood in pre-pandemic days, such as August 2018, when its median sale price was $341,500.

Inventory in the Dallas Housing Market Continues to Dwindle

Unlike many other housing markets in the U.S., the Dallas housing market has not witnessed a major build-up in its available inventory. While it is true that the city of Dallas proper has seen its housing inventory increase by 6.9% year-over-year, the Dallas metro area has experienced a decline of 7.3%, from 14,580 homes for sale in August 2022, down to 13,510 homes in August 2023. Below is a table of the year-over-year change in inventory in the greater Dallas housing market:

As you can see, the overwhelming majority of cities in the greater Dallas housing market have experienced decreases in available inventory. Although typically a decline in available inventory induces a rise in home prices due to the laws of supply-and-demand, in the Dallas housing market this isn’t necessarily true. For instance, in Lewisville, available inventory declined the most year-over-year, by nearly two-fifths (39.3%), yet its median sale price only rose by 1.1% from August 2022 to August 2023. In Allen, for-sale inventory fell by 27.4%, yet its median sale price also fell, by 11.5% from August 2022 to August 2023.

As inventory has declined in most of the Dallas housing market, critically, the number of monthly home sales has also decreased in all but four cities. In the Dallas metro area overall, the number of monthly home sales fell by 10.4%, from 6,141 in August 2022 to 5,501 in August 2023. In Dallas proper, monthly home sales fell by 20.6% year-over-year, while Euless, which experienced a 19% decrease in available inventory, saw its monthly home sales fall by 35.1% from August 2022 to August 2023.

Price Drops Have Decreased in the Dallas Housing Market

Another important metric when analyzing housing markets is the percentage of active listings that experienced price drops. Here again, the Dallas housing market is unlike many others in the U.S., such as the Seattle housing market or the Denver housing market, in that the share of active listings with price drops has declined year-over-year across the board.

Last year, in the Dallas metro area, 40.7% of active listings experienced price drops in August 2022. This figure declined slightly to 39.5% in August 2023. In the city of Dallas proper, the percentage of active listings with price drops also declined year-over-year, from 37.4% in August 2022 to 36.1% in August 2023. Despite the number of monthly home sales declining in most of the Dallas housing market, this has not led to an increase in price drops.

The city of Grapevine experienced a massive decline in its percentage of active listings with price drops: From having 61.4% of active listings with price drops in August 2022, the figure plummeted by 51.9%, reaching a mere 29.6% in August 2023. On the other hand, Denton experienced a notable increase, with the share of active listings with price drops rising by 39.5%, from 36.4% of active listings in August 2022 to 50.8% of active listings in August 2023.

Houses for Sale in the Dallas Housing Market Are Staying on the Market Longer

Another very useful metric for analyzing housing market activity is the length of time a home for sale spends on the market before getting bought up. Redfin refers to this measure as days on market, which represents the monthly median days on market a home for sale sits before being taken off the market. In the Dallas metro area, the median number of days on market of a home for sale rose from 25 days in August 2022 to 33 days in August 2023, equal to an annual increase of roughly 32%. In the city of Dallas proper, the year-over-year increase in the median days on market was smaller — 26.1% — rising from 23 days on market in August 2022 to 29 days on market in August 2023. In 20 out of 24 cities analyzed in the greater Dallas housing market experienced an increase in the days on market a home for sale spends before getting bought up.

Not surprisingly, the city that witnessed the largest year-over-year increase in days on market is Denton, which also saw the largest increase in active listings with price drops. The median days on market for a home in Denton rose by 78.9%, from 19 days in August 2022 to 34 days in August 2023. What’s more, the median days on market in Denton now exceeds the number of days in both August 2020 and August 2018, when the median was 24 days. In Fort Worth, the same trend occurred, with the city having a median days on market of 32 days in August 2023 compared to 30 days in August 2018.

The Bottom Line on a Dallas Housing Market Crash

On the question of whether the Dallas housing market will crash, the data seems to point to such an event being very unlikely. As with so many housing markets across the U.S., the Dallas housing market has experienced a moderation in housing market activity, yet an outright crash doesn’t appear to be reflected in the data. A very significant thing to note about America’s housing market today is that the vast majority of current homeowners got their mortgages during the era of low fed funds rates in the 2010s, when interest rates had been slashed across the board in order to stimulate recovery from the global financial crisis. Thus, a much smaller percentage of American homeowners are likely to encounter the level of repayment shock as occurred when adjustable-rate mortgages of the housing bubble era reset at new, higher rates.

The tell-tale signs of a bubble cannot be found in the data. As mentioned, the vast majority of the Dallas housing market has not seen a build-up in housing inventory. While many cities in the greater Dallas housing market experienced a year-over-year decline in the number of monthly home sales, in most cases this has been a longer-term trend, stretching back to the pre-pandemic days in 2018. Additionally, most homes in the Dallas housing market are selling at prices that are close to their original list price. Typically, a housing market experiencing a bubble will see a significant rise in the sales-to-list ratio — meaning that the final sale price is far above the initial list price. In the Dallas housing market, in August 2022, most cities had sales-to-list ratios that were only slightly above 100% and a year later, in August 2023, these sales-to-list ratios may have fallen but continue to be close to 100%.