2021 Dallas Real Estate Market Investing Forecast

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This market forecast includes data from Dallas data and its surrounding areas, including Fort Worth, Arlington, and more.

Why consider Dallas for real estate investing?

Dallas itself might not be the biggest housing market in the country, but when you lump in its neighboring towns of Fort Worth and Arlington, you get a massive metropolitan area home to more than 7.5 million people — rivaling only New York City in terms of population.

The area — known to most locals as “DFW” — is a sprawling, 8,600-square-mile stretch of culture, industry, and education. It’s home to some of the world’s biggest defense manufacturers, big-name players in oil and gas, and a number of top-notch universities and colleges, including Texas Christian University, Southern Methodist University, the University of North Texas, and more.

Are you considering investing in Dallas-area real estate? Here’s what you need to know about the 2021 market.

The state of the market

Dallas is in the process of bouncing back from the pandemic. Unfortunately, while many of its housing market indicators are improving, there are some key issues that could hold the city — as well as those who wish to invest there — back.

Here are the three major trends we’re seeing in the Dallas-Fort Worth area right now:

  • Supply is a problem.
  • Rentals aren’t in high demand.
  • Prices are rising, both on rentals and single-family homes.

1. Supply is a problem. This sounds like a throwaway (after all, supply is an issue everywhere these days), but in DFW, it’s notably bad.

Not only is current housing supply at record lows, but it’s also below the national average. To make matters worse, there doesn’t seem to be much hope on the horizon. Building permits are down, builder confidence is waning, and construction is getting more expensive. The one bright spot is in multifamily, which has seen a major uptick in permitting activity over the last month.

2. Rentals aren’t in high demand. Rental vacancies in Dallas have been all over the place: up, down, and then right back up again. But right now? They’re sitting high at 8.4%, well above national averages.

With more multifamily construction on the way (see above about multifamily permitting data), it makes you wonder: Who will live in all those added units?

3. Prices are rising — both on rentals and single-family homes. Like most of the country’s housing markets, rents and home prices are on the rise in Dallas. Homes are almost 12% more expensive than they were a year ago, and rents are just under 3% higher.

Both fall under the national trendline for now, but when compared to other Texas markets (save for Austin), they clock in among the most expensive. For investors, it’s reason for optimism — especially those eyeing rental properties (or anyone looking to sell a home in the near term).

Dallas housing demand indicators

Charts courtesy of Housing Tides, an EnergyLogic company.

Demand is likely to weaken in the Dallas area this year, as many of the region’s key indicators are trending downward. Though the area is adding a healthy number of households annually, consumer sentiment and employment are down. With rent and home prices on the rise, this could stifle demand in the months to come. Overall, our data shows the majority of Dallas’ demand indicators are “unhealthy” and “weakening.”

Unemployment trends

As with many cities in the U.S., unemployment is up in Dallas. The current unemployment rate in DFW is 6.5%, an improvement from the 12.8% rate seen almost a year ago but higher than the current national average of 6.3%.

The region has lost around 116,000 jobs in the last year. Job losses had been steadily shrinking between April and December, but they saw a slight increase in January. Despite this, they’re still a marked improvement over the 400,000 jobs lost last March.