DALLAS — Dallas is growing at a massive rate. In fact, a new study shows the DFW Metroplex's projected population growth is exceeding that of the entire state of Texas from 2025 to 2050.
With that growth in mind, it's imperative the city builds much more housing. But due to the rapid increase in the cost of homebuying and renting, a large portion of the market may not even be able to buy the homes being built.
Clare Losey, an assistant research economist with the Texas Real Estate Research Center, presented the study to the city's housing and homelessness solutions committee at the end of last month and said housing affordability is the most pressing issue currently facing communities across Texas.
"I know, in the wake of inflation and continued economic hardships, we are seeing hundreds of thousands, millions of households across the US struggling with housing," Losey told committee members. "So, it's only becoming a more salient topic in today's times."
Factors constraining housing affordability in Dallas, she said, include sustained home price appreciation and rent growth as well as a limited supply of homes for sale and apartment units for rent.
"In the midst of all that, we're now seeing rapid rises in mortgage interest rates, which could moderate demand for home ownership, but will affect low-income and minority buyers first," Losey said.
Since the start of the COVID-19 pandemic in the second quarter of 2020 to the end of March this year, home price appreciation measured 14.8%, Losey said -- much higher than it was in the past.
"In the Dallas area, there's just been a vast uptick in home prices, and that's going to push first-time potential homebuyers out first, as well as low-income and minority buyers."
Rent growth in Dallas-Fort Worth averaged about 4.2% from the second quarter of 2020 through the first quarter of this year, she said, which is putting upward pressure on the cost of rent as well as home prices. And in the midst of all of that, there's a limited supply of homes for sale.
Across the board, Losey said the increase in home price appreciation and rent growth has vastly outpaced the increase in median family income, which increased about 3% in 2021, compared to the 19% increase in home price appreciation and the 3.5% increase in rent growth.
A balanced market should have about 6.5 months of home inventory, Losey said. Dallas has less than a month's worth of inventory, with the average home spending about 29 days on the market.
Another factor affecting the market is the increases in cost of construction, which diminish housing affordability as well. The increase in the producer price index has actually outpaced the increase in the consumer price index.
"What that's telling us is that producers, i.e., builders and developers, will likely continue to pass on the increased cost of construction onto homebuyers and renters," Losey said.
Actions proposed by the study include developing affordable homeownership programs like down payment assistance, she added, which is intended to reduce the barriers to homeownership.
These programs, she said, in combination with homeownership counseling, can reduce one of the primary barriers to obtaining ownership -- wealth.
