A lot can change in four years, and there may be no area more starkly affected in Dallas than the cost of housing.
An analysis by real estate and rental platform Zillow Group Inc. shows the income needed to comfortably afford a home in Dallas is up by $53,679 since January 2020.
That puts the income needed to afford a typical home — estimated at $366,690 in the North Texas metro area — at $121,398. Zillow calculates it would take about 8.3 years to save for a down payment for such a property and a buyer could expect a mortgage of about $2,340 at current interest rates.
Zillow used its home value index for its analysis and took median household income figures from the American Community Survey. For mortgage payments, Zillow included principal and interest, as well as estimated taxes and insurance for a 10% down payment.
Nationwide, Zillow found home shoppers need to make more than $106,000 to afford a home, an 80% leap from 2020′s $59,000 sum. Monthly mortgage payments on a typical home have doubled since 2020.
The four-year timeframe of Zillow’s analysis portrays a pre- and post-pandemic reality for the Dallas housing market, one defined by escalating home prices and exacerbated by hiked interest rates.
The home price runup stemmed from sheer demand for properties.
During 2020 and 2021, the region saw homebuyers angle to move into larger houses that could accommodate home office spaces with the COVID-19 reality. That was then combined with a population explosion tied to migration from other states.
The Dallas-Fort Worth metro area topped 8 million in population last year, according to estimates from the Texas Demographic Center. D-FW accounted for 36% of the state’s population growth between 2020 and 2022, adding about 423,000 people during that time.
Bank of America’s Allen Seelenbinder describes Texas as “its own animal” compared to the rest of the central U.S.
He said the past several years brought in more potential types of homebuyers, not only those seeking a base to work remotely but also those moving to Texas seeking more rooms or following jobs.
“You have buyers competing with people from California, Delaware and Oregon. Affordability in Texas is much better than those places and is below-market based on what they’re used to, so it drives up the price,” said Seelenbinder, who is a divisional sales executive for the Charlotte-based bank.
“It might not seem affordable when you’ve seen homes in your neighborhood increase 40% over seven years, but when you come from an area that saw a 110% increase over the same time period, to them it’s more affordable,” he said.
Renting may seem palatable to some given mortgage costs, but lease prices don’t differ much from mortgages for properties with two or more bedrooms. Zillow puts the median March rent at $2,100 for two-bedroom properties in Dallas.
Seelenbinder said he has started to see a plateau in the market compared to the frantic pace between 2020 and 2022.
“We’re not at a time right now where we’re going to see 40 offers on the same property the day it goes on the market,” he said. “If you have a homebuyer that is prepared, understands what’s important to them and where they have affordability in their personal finances, then they can make an educated decision and they’re not making an impulse buy.”
While the new income baseline begs the question of affordability in the Dallas area, there are a handful of programs in the public and private spheres that can aid buyers in purchasing properties.
Dallasites can assess their eligibility within the Dallas Homebuyer Assistance Program, an initiative funded by the U.S. Department of Housing and Urban Development.
Through the Texas Department of Housing and Community Affairs, the Texas Homebuyer Program can aid in down-payment assistance for first-time homebuyers or previous homeowners who haven’t owned a home in three years.
Financial institutions, like Bank of America, offer buyer-assistance programs such as down-payment grants, which typically require a would-be homeowner to utilize that bank’s mortgage services to qualify.
“It’s so important that every buyer is knowledgeable specifically on the area they want to be in, on their own personal finances, and that they’re patient because they need to find what’s right for them,” Seelenbinder said.
