Real Estate Rumblings

This is how much a starter home will cost you in Dallas

The median starter home price in Dallas continues to increase.

Photo courtesy of Dave Perry-Miller Real Estate

As real estate prices rise across the United States, buying a home has become more competitive than ever, and as more inventory moves off the market, historically affordable markets have become slightly less affordable. In certain areas, starter homes in particular are becoming non-existent, but in Texas, starter home prices are rising despite regular inventory levels.

On a national scale, the number of available starter homes this year dropped 12.1 percent. In addition, buyers now have to pay more than ever to get their hands on a starter home, as much as 1.9 percent more of their income, and likely to continue growing. However, Texas is faring relatively well. According to a recent Trulia research article, “Inventory and Price Watch: It’s Harder to Get Started,” price, not inventory, is the problem across Texas metropolitan areas.

In Houston, the median starter home price in Q4 of 2016 was $104,967 — a 16.6 percent change over Q4 of 2015. However, buyers in Houston needed a 3.4 percent additional share of income to afford a starter home. Dallas fared slightly better. The average cost of a home in Q4 of 2015 was $117,667, only a 2.9 percent additional share of income.

Austin is one of the fastest growing metros in Texas, so it makes sense that the median starter home price jumped considerably, to $182,867, a 4.2 percent additional share of income. The Fort Worth-Arlington metropolitan area saw the smallest increase in price and share of income, with a median starter home list price of $99,633 and a 0.8 percent increase in share of income.

The good news is that Texas is still a smart place to invest in real estate, despite the overall decrease in inventory and steady increase in price.

home-for-sale trulia

welcome home

This is the income you need to buy a starter home in Dallas right now

Photo by Zac Gudakov on Unsplash

Dallas and Austin lead the nation for improving starter-home affordability.

A new housing affordability report shows Dallas is among the nation's top metros for improving starter-home affordability. First-time buyers are finally catching a small break, with the income needed to purchase a median-priced starter home falling in 2026.

Dallas residents need to earn $83,096 to afford a median-priced home in the metro area, or 5.1 percent less than they did last year, the Redfin report found.

Dallas had the third-biggest decline in the income needed to afford a starter home out of the 50 U.S. metros analyzed in the report. Redfin also determined that all starter home listings in Dallas are "affordable" based on the city's median household income — which the report estimates at $103,144.

Dallas still has a far higher income required to afford a starter home compared to the national average, but affordability is improving slightly across the board. Americans need to make $70,693 to afford the typical starter home, according to the report's findings.

"The income needed to buy a starter home is declining while earnings are rising," the report said. "The typical American household earns an estimated $87,599, about $17,000 more than what’s needed to buy the median-priced U.S. starter home. That gap is widening: A year ago, the typical American earned roughly $12,500 more than they needed to buy a starter home."

Still, starter home affordability is "still often out of reach" for first-time homebuyers in expensive real estate markets due to "near high record" sale prices and soaring mortgage rates, the study said.

In neighboring Fort Worth, residents only need to make $77,886 to afford a starter home — an attainable milestone based on the city's estimated median household income of $93,102. Fort Worth ranks fourth nationwide for its year-over-year improvement in starter home affordability.

For additional comparison, this is the income needed to afford a starter home in other major Texas metros:

Austin – $92,607 (down 6.1 percent)
Houston – $70,384 (down 4 percent)
San Antonio – $62,859 (down 3.7 percent)

Unfortunately, affording a home in the overall housing market is further straining Americans' wallets. American households need to make just under $110,000 afford the typical U.S. home, but Redfin's evaluation found the typical household makes about $22,000 less than that.

"The discrepancy is partly because the overall market is driven by outsized price increases in the luxury segment, and outsized price increases in places like San Francisco and West Palm Beach, where affluent buyers are active," the report said. "At the same time, some would-be buyers of starter homes are pulling back because they typically earn less money and are more sensitive to affordability pressures."

The top 10 U.S. metros with the biggest declines in the income required to afford the typical starter home are:

No. 1 – Austin, Texas
No. 2 – Oakland, California
No. 3 – Dallas, Texas
No. 4 – Fort Worth, Texas
No. 5 – Denver, Colorado
No. 6 – San Francisco, California
No. 7 – Phoenix, Arizona
No. 8 – Las Vegas, Nevada
No. 9 – Houston, Texas
No. 10 – Los Angeles, California

housing market real estate reports starter homes