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Dallas-Fort Worth home prices could climb this high in 2021, says new forecast

The Dallas-Fort Worth market continues to be hot.

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If a new prediction is accurate, the median home price in Dallas-Fort Worth would reach at least $316,000 in 2021, and home sales growth would surpass that of Texas’ three other major metro areas.

Realtor.com predicts DFW will see combined sales and price growth of 15.7 percent next year in the housing market compared with 2020. That figure puts it at No. 22 in Realtor.com’s ranking of the top 100 major metro areas; it’s the highest ranking among the state’s four major metros. DFW’s 15.7 percent number breaks down to 11.3 percent for sales growth and 4.4 percent for price growth.

If Realtor.com is correct, the 4.4 percent growth rate for home prices could push the median home price in DFW to more than $316,800 in 2021 from $303,500 in October. That growth rate would be welcome news, though. From October 2019 to October 2020, the median price of a home in DFW jumped 12.4 percent, according to the Real Estate Center at Texas A&M University.

Meanwhile, projected sales growth of 11.3 percent would make for a busy 2021 for DFW homebuyers and home sellers. Spurred by historically low mortgage interest rates, a record-setting 12,829 homes were sold in DFW in July, the Texas A&M center says.

“We expect a healthy level of growth across Texas metros in 2021, with prices expected to rise 4 to 5 percent in each of the major metros and sales expected to grow between 5 and 11 percent over 2020,” says Danielle Hale, chief economist at Realtor.com. “An improving economy that drives strong job growth is a big contributing factor in these metros, in addition to above-average household growth.”

“Younger buyers are already doing well in most of these markets,” Hale adds, “and because they make up an above-average portion of the population in these metros, we expect them to contribute to healthy sales growth.”

Elsewhere in Texas:

Austin could be the state’s most challenging market in 2021 for younger homebuyers, Hale says. That’s because Austin is a competitive market where the median home price surged 19.7 percent from November 2019 to November 2020, she says, and because hefty down payments “are a big hurdle for first-time buyers.”

Among the state’s four major metros, Austin ranks second in the Realtor.com forecast. Its national ranking sits at No. 37, with year-over-year sales growth pegged at 8.6 percent and year-over-year price growth projected to be 4.6 percent for a combined total of 13 percent.

At No. 47 nationally is San Antonio. There, the sales growth rate in 2021 is expected to be 7.2 percent and the price growth rate is predicted to be 4.3 percent for a combined total of 11.5 percent.

Houston lands at No. 61 on the Realtor.com list. The website envisions 5.3 percent growth for sales and 4.6 percent growth for prices for a combined total of 9.9 percent.

At No. 16, El Paso is the top-ranked Texas market in the Realtor.com forecast. The combined 17 percent growth rate envisioned for 2021 comprises 10.6 percent growth in sales and 6.4 percent growth in prices.

Here are the top five metro markets in Realtor.com’s outlook:

Sacramento, California, 24.6 percent overall growth rate
San Jose, California, 21.6 percent overall growth rate
Charlotte, North Carolina, 19 percent overall growth rate
Boise, Idaho, 18.9 percent overall growth rate
Seattle, 18.4 percent overall growth rate

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

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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

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