Markets to Watch

Dallas-Fort Worth named the No. 2 real estate market to watch in 2023

Dallas is the 8th best city in America for millennials to live.

Photo by Justin Terveen

The real estate market may be changing, but Dallas is still one of the hottest in the U.S. as we head into 2023.

The Urban Land Institute (ULI)'s annual Emerging Trends in Real Estate report, released October 27, names Dallas-Fort Worth the No. 2 U.S. market to watch in 2023, behind only Nashville.

The report, a joint project between ULI and PricewaterhouseCoopers, "provides an outlook on real estate investment and development trends, real estate finance and capital markets, property sectors, metropolitan areas, and other real estate issues throughout the United States and Canada."

It is based on surveys and interviews with real estate industry professionals.

After an in-depth analysis, the report identifies the top U.S. markets to watch, based on overall real estate prospects. Austin, San Antonio, and Houston join DFW in the top 15, at at Nos. 4, 12, and 14, respectively.

A top trend heading into 2023 is the continued "normalization" of markets following the post-COVID boom. Notes the report: "Almost every market in the country received lower ratings for both investment and development prospects this year, illustrating that outlooks are darkening just about everywhere following the brief post-COVID exuberance shown in last year’s survey across a variety of metrics."

However, it continues, "the pandemic seems to have reinforced some trends, notably the dominance of what we called the 'Magnet' markets — many of which are in warmer Sun Belt regions — at the top of the Emerging Trends 'Markets to Watch' standings."

Those "Magnet" markets include Dallas-Fort Worth, as well as Austin, San Antonio, Houston, and others. The report further categorizes markets into subgroups, with Dallas, along with San Antonio and Houston, falling into the "Super Sun Belt" group.

"These markets are large and diverse but still affordable, forming powerhouse economies that attract a wide range of businesses. Despite their large population bases, most are among the fastest-growing markets in the United States. Moreover, their economic performance has been solid through thick and thin," the report states.

"Though every market lost jobs during the pandemic recession, recovery has been much quicker and more complete in the Super Sun Belt markets. These metro areas collectively have the highest average rating of any subgroup, as it did last year."

Austin is classified as a real estate "Supernova," defined as a smaller metro area (1 to 2 million residents) that has "exploded into prominence over the past decade or so."

According to the report, Austin has the highest investor demand of any market, with Dallas just two spots below. Dallas, meanwhile, tops the list for development/redevelopment opportunities, with Austin at No. 6. Both cities boast the strongest local economies among the markets studied, with Austin at No. 1 and Dallas at No. 2.

No Cap

Dallas was a top-10 destination for Gen Zers on the move for 2023

Photo by Lance Asper on Unsplash

Who wouldn't want to live in a Gen Z paradise like Dallas?

As Gen Z enters adulthood, many are flocking to the nation's biggest cultural hubs like New York City, Los Angeles — and now Dallas, which had the ninth-highest inflow of Gen Zers in 2023.

Dallas' new reputation as a Gen Z hotspot was unveiled in a recent report by American home improvement brand This Old House, which analyzed migration trends across multiple generations using 2023 U.S. Census Bureau data.

Dallas saw an influx of 13,770 Gen Z residents last year to become the generation's No. 9 most popular city. That's 4,223 more Gen Zers than the net migration rate from 2022, the report found.

Real estate marketplace Zillow seems to agree on a statewide scale, declaring Texas as the No. 1 destination for Gen Zers on the move in 2024.

However, as Gen Z Dallasites may have learned, it's going to take a big bite out of their paychecks to live in such a highly sought after city. A March RentCafe housing cost analysis predicted Gen Z adults living in Dallas are likely to spend over $149,000 on rent by the time they are 30 years old.

While Dallas saw big gains in its Gen Z population last year, many other big cities saw a mass exodus. Plano, for example — which gained 1,295 Gen Z residents in 2022 — lost 4,028 Gen Zers in 2023, the report discovered.

The biggest Gen-Z exodus was in El Paso, with a drop of 5,607 — "a sharp turn from 2022 when the city saw an increase," the report said. "Other cities, including Plano, Texas; Memphis, Tennessee; McKinney, Texas; and Wichita, Kansas, are seeing similar declines."

"Gen X, baby boomers, and the Silent Generation are also moving away from major cities, particularly New York City and Washington, D.C.," the report said. "They’re heading to some of the same cities as Gen Z, including Houston and Jacksonville, Florida."

The top 10 cities that gained the most Gen Z residents in 2023 are:

No. 1 – New York City, New York
No. 2 – Los Angeles, California
No. 3 – Houston, Texas
No. 4 – Philadelphia, Pennsylvania
No. 5 – Chicago, Illinois
No. 6 – San Diego, California
No. 7 – Seattle, Washington
No. 8 – Charlotte, North Carolina
No. 9 – Dallas, Texas
No. 10 – Minneapolis, Minnesota

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