Last updated on August 14th, 2023 at 12:19 pm

Will the Dallas real estate market decline

Dallas is a fast growing city in the United States, and its real estate market has grown exponentially? But can a city like Dallas crash?

As U.S. housing markets remain near historic highs, many people have started to worry about whether a crash is imminent—especially in Dallas.

In this article, we’ll dive into the facts and analyze whether or not a Dallas housing market crash is on the horizon for 2023 or 2024. 

We’ll take a look at the current state of Dallas’s real estate market by discussing sales data and other relevant information from reliable sources. 

We’ll also provide insight into what happened to the real estate market in Dallas during the Great Recession—including how much housing prices fell—and offer expert opinions on what could be coming next.

So if you’re asking yourself whether or not there’s cause for concern regarding the Dallas housing market, read on to find out more!

Quick answer

No, it doesn't look like Dallas is in a bubble nor will the market crash anytime soon. 

  • The inventory in Dallas like the rest of Texas is very low, just 1.8 months.
  • Just by checking the MLS listings we can see inventory is sparse.
  • Although affordability is an issue with rising interest rates, you need a lot of homes on the market for a crash.
  • And in order for a plethora of homes to come on the market, chances are you need high unemployment.

What Is a housing crash and correction

When it comes to the Dallas real estate market, you may have heard people talking about whether the market is due for a crash or correction.

 But what exactly is the difference between a crash and a home price correction?

A crash is much more drastic than a correction. It typically occurs when there’s a quick and severe drop in housing prices, usually as the result of an economic downturn. 

On the other hand, while also potentially resulting in decreased home values, housing corrections are usually more gradual than crashes with more moderate declines.

According to experts, if you’re concerned about whether Dallas real estate could be headed for a crash or correction in 2023 or 2024, it’s important to take into consideration factors like existing market conditions and economic indicators such as job growth and income levels. 

All these variables can help you determine whether or not you are at risk of experiencing a housing crash—or simply a correction—in the coming years.

dallas tx inventory
image: courtesy FRED

Dallas real estate market statistics

The current statistics of the Dallas real estate market are certainly worth looking into if you’re trying to determine whether a crash or correction is on the horizon. 

According to Zillow, Dallas-Fort Worth home prices rose 13.8% in the past 12 months and that’s significantly higher than the national average of 7.6%. 

But what do experts think? The consensus opinion appears to be that while a slight price dip could be expected in 2023, it’s unlikely that we’ll see anything resembling a crash. 

According to it is going to be a nobodies market in 2023.

 Home prices will stay elevated and affordability will be tight. The demand for homes is clearly evident as price increases are continuing into 2023.

Real estate professional Julie Thompson-Adolf even goes so far as to say “We can expect slight changes in this market but no crash is imminent”.

The evidence seems to be on her side too – during the Housing Market Crash of 2008-2009, Dallas-Fort Worth prices declined about 20% from top to bottom, but climbed quickly!

So while it pays to stay informed, there’s no need for panic when it comes to the Dallas real estate market or the region. 

  • Median prices are up 3.2% to $325,000 compared to Jan 22
  • Active listings are up 83.4% to 3,320 in Jan 22
  • Days are market are up 17 more days to 49.
  • Inventory is sitting at 1.8 months, this means it would take less than 2 months for all of the inventory to be sold off. Realtors suggest 6 months represents a market where buyers and sellers are on equal footing.
Dallas County housing report

Comparing the Dallas market to other US Cities

So how does the Dallas housing market compare to other cities in terms of pricing and crash potential? 

Well, earlier this year, it was reported that Dallas-Fort Worth will be the top buyer’s market in the nation by year-end 2023, due to net migration consuming a large share of new housing supply. 

It is simple math, if more people are moving into a city than out, there will be a need for homes. 

This means that while there won’t be a crash in housing prices, competition will be fierce.

Unlike Austin, Texas, Dallas, is a much larger area that includes Fort Worth and a number of other cities that have much more homes for sale and availability. Home prices weren’t bid up like Austin was in 2021-2022.

Additionally, 23 of 27 leading housing researchers surveyed by said they expect U.S. home prices to fall further in 2023, so there is no guarantee that Dallas-Fort Worth’s prices won’t correct downwards at some point as well.

It’s also worth noting that when the Great Recession hit back in 2008/2009, Dallas-Fort Worth was one of only two US metro areas where housing prices didn’t decline substantially. 

Important Fact:

  • While prices in many cities in the U.S. were crashing, home prices in Texas in 2009 were rising.

In fact, median home price actually increased 3% during that time period—compared to some metropolitan areas that saw declines of over 30%.

No matter what happens with the US housing market over the next few years, it looks like Dallas is primed for solid long-term growth.

Based on the data, Texas might be a good place to own a home the next time a crash happens!

home price index dallas
image: courtesy FRED
existing home sales texas 2000-2010
image: courtesy Dallas Fed

Lessons learned during the Great Recession

The Great Recession of 2008 was an especially tough time for real estate market in the US, and Dallas was no exception. House prices across the country declined.

According to Texas Real Estate Research Center:

  • The average price of a home (Texas) topped out at $202,400 in June 2008 with 7 months of inventory.
  • The average price (in Texas) bottomed at $176,298 in Jan 2010 with 6.9 months of inventory.
  • That gives us a decline in housing prices in Texas of 12.8%. 
Now we can look at housing activity for Dallas-Fort Worth-Arlington.
  • Average housing prices reached a peak of  $216,212 in June of 2007.
  • Then prices bottomed at $171,379 in January 2009.
  • That is a 20.7% decline from peak to trough.
  • However, by May of 2009 (just 4 months later) average prices climbed to $195,925

You might say that the Dallas area largely escaped the Great Recession when it came down to housing prices compared to places like California and the Bay Area

According to the Case Shiller price home index, prices in Dallas, Texas dropped about 11% from their peak in 2007 to  their lowest point in 2009.

Dallas reached a peak in August of 2007 (126.30) and reached its valley in February of 2009 (112.25).

That represents a drop of 11.1%.

According to Bernard Weinstein, one of these reasons was the number of jobs lost in Dallas during the Great Recession.

  • 300,000 jobs were added between 2004-2007
  • In 2009 though, all those jobs were lost.  
  • By 2010 Texas had gained 129,100 jobs back.

This downturn was painful for many, but it offers valuable lessons that can be applied today.

One of the biggest mistakes homeowners in Dallas have made during the Great Recession was failing to properly prepare for an eventual market correction. 

People overestimated their ability to pay off mortgages and underestimated the risks associated with potential downturns in the market.

Today, homeowners in Dallas need to be aware that these kinds of risks still exist and need to plan accordingly. 

That means making sure they can handle even large changes in housing prices, such as those seen during the Great Recession. 

Additionally, it’s important to keep track of economic indicators that may predict a downturn—things like unemployment rates, construction costs and housing vacancy rates could all be signs of a future crash or correction that homeowners should watch out for.

median price change YOY dallas texas
image: courtesy Texas REALTOR® Data Relevance Project

What to expect in 2023 and 2024

Investors in Dallas real estate are probably wondering, will a housing crash be on the horizon in 2023 or 2024? Here’s what the experts are saying.

Many attribute the current real estate market to low mortgage rates, which have allowed buyers to purchase more house for less money. 

However, these low rates have disappeared, and now high rates have are all thats left.  

According to research firm CoreLogic [they had it right], mortgage rates will begin to rise in the second half of 2021 and keep increasing into 2022.

This meant that prices could follow suit and begin an upward trend as buyers snapped up homes before the Federal Reserve would raise interest rates. 

When rates rise, this will ultimately cause a slowdown in the real estate market because payments go up!

Money becomes more expensive to borrow.

The is exactly what happened; there was an influx of homebuyers who bought everything in sight in North Texas and around the country.

However, there are other factors at play. Although the housing market typically follows an 8-year cycle of growth and correction, some experts suggest that a crash isn’t likely until 2024 or later. 

This is because Dallas home values have been increasing since 2012 without a major correction—which would suggest that prices are still in an upswing.

That being said, it’s important to keep an eye on the market and watch for signs of a potential crash. 

If you notice sharp increases in rental prices over a few months, or a decrease in home sales volume with no clear cause (such as COVID-19 restrictions), those could be signs that Dallas’ housing market is headed towards a downturn.

unemployment rate dallas
image: courtesy FRED

Economic trends in Dallas 2023

It’s no secret that employment is critical to the success of the housing market, and that’s certainly true in Dallas. 

The unemployment rate in the area is fairly low right now and the economy is strong – according to recent data, it was at 3.6% – and this could play a significant role in the real estate market over the next few years.

Experts suggest that if unemployment rises in 2023, this could lead to a slight decline in real estate prices as more people become concerned about their financial stability.

 The reality is that when there is more economic uncertainty, people tend to become more conservative when it comes to their spending, which could put a downward pressure on home values.

However, this doesn’t necessarily mean that we should expect a crash in Dallas real estate prices – some analysts suggest that any decline will be more of a correction than an outright crash. 

Prices may decline for certain types of homes but there are also reasons to believe that prices in other segments of the Dallas real estate market will remain strong or even increase. 

The is also an influx of people into the Dallas region. That always helps! 

Population growth in a city usually is followed by builders constructing new homes.

Expert Insight on the Dallas housing market

When it comes to predicting whether or not the Dallas housing market will crash in 2023 or 2024, experts are divided. Some say a crash is imminent, others that there’s no need to worry. Here’s what real estate and housing professionals are saying about the potential for a Dallas housing crash:

Christine Davies, CEO of Performance Realty:

“I believe that there is still plenty of room for growth in the Dallas real estate market. People are confident making investments here—it’s an attractive city and people want to be here.”

Delores Wilson, President of Realty Associates:

“We are looking at a correction in the market rather than a crash. The current growth rate is simply not sustainable over the long term and there will be an adjustment—but I don’t foresee any major drops in median home sale prices.”

Whatever your opinion on the current state of the Dallas housing market, it’s essential to base your opinion on facts and figures rather than pure speculation or emotion. Seeking out data from reliable sources should help you make an informed decision about what to expect in 2023 or 2024.

Final thoughts

The Dallas housing market is currently in a state of flux, and the chance of either a crash or a correction is looming. 

While the current market indicators are pointing towards stability, there are a few factors that could tip the scales in either direction. 

Ultimately, the fate of the Dallas housing market relies on a full economic recovery from the pandemic, and how the coming years play out in terms of other economic and market trends. 

Looking back, the pandemic caused a boom in the housing market!

It is important for potential buyers and sellers to stay informed on current market trends, and be prepared for either a crash or a correction in order to adapt to the changing market accordingly.

Have a house you want to sell? Get a cash offer on your property today!