Our forecast for the Dallas area housing market in 2023 can be summed up in one sentence: A significant cooling trend could slow (or even reverse) home-price growth in the area while shifting the market in favor of buyers.
The same could be said for other major cities across Texas, including the formerly red-hot Austin housing market. It’s all part of an ongoing shift that’s playing out in cities nationwide. Inventory is growing, prices are slowing, and buyers are gaining some much-needed negotiating leverage.
Any way you measure it, change is in the air!
Dallas Housing Forecast 2023: A Major Shift Ahead?
For the past couple of years, home buyers in the Dallas-Fort Worth metro area have had to deal with tight supply conditions and stiff competition. Rapidly rising home values added insult to injury, squeezing many would-be buyers out of the market entirely.
Now, all of that is starting to change. The Dallas real estate market of 2023 could look very different from what we’ve seen over the past two years.
On August 9, researchers from Realtor.com published their “July Housing Report.” It contained data for the nation as a whole, as well as the 50 largest metropolitan areas. According to Realtor.com, the Dallas-area real estate market experienced significant inventory growth in summer 2022.
Total property listings in the DFW area rose by a whopping 81% in July 2022, compared to a year earlier. To put it differently: Dallas-area house hunters had 81% more homes to choose from last month when compared to the previous year.
This report also showed an increase in the number of new real estate listings (i.e., houses that came onto the market within recent days). Both trends show that inventory levels are finally starting to rise.
This is good news for those who are planning to buy a home in the Dallas Fort-Worth housing market in 2023. Inventory growth should help to ease the competition among buyers, while increasing their chance of finding a home.
If this inventory growth continues over the coming months, it could also slow the rapid home-price growth we mentioned earlier. In fact, we’re already seeing signs of price weakness in the DFW area.
Which leads to our next Dallas real estate market prediction for 2023…
DFW Home Prices Showing Weakness in 2022
Over the past year or so, the median home value for the Dallas-Fort Worth metroplex rose by around 27%. That’s based on data provided by Zillow, as of August 2022, and it indicates an unprecedented level of price growth.
But when you look at the latest monthly data, you’ll see a very different picture. House values within the Dallas real estate market are now showing some weakness, for the first time in many months.
According to an August 2022 report from RE/MAX, home prices in the Dallas metro area actually dropped a bit in July. In fact, among the 53 U.S. metro areas analyzed, Dallas was the only real estate market to post a price decline during that month.
To quote the August RE/MAX report:
“In July 2022, the median of all 53 metro area Sales Prices was $415,000, down 2.9% compared to June 2022, and up 8.1% from July 2021. One metro area saw a year-over-year decrease in Median Sales Price, Dallas, TX at -1.9%.”
These reports and forecasts for the Dallas housing market show (and suggest) that the real estate scene is cooling down. This trend will likely carry into 2023 as well, especially if inventory levels continue to rise.
And sellers seem to be getting the message. The Realtor.com housing report mentioned earlier revealed that 27% of DFW homes listed during the month of July had a price reduction. The percentage of listings with a price reduction rose by nearly 17% over the past year or so.
In other words, more and more sellers are slashing their asking prices in order to attract buyers. That’s a totally different scenario from 2021, when many buyers were happy to offer more than the list price. And it provides further evidence that the Dallas real estate market is shifting in a more buyer-friendly direction.
Will 2023 Be a Good Time to Buy a House?
With all of these reports and forecasts, Dallas home buyers might wonder if now is a good time to buy a home. And what about next year? Will 2023 be a good time to buy a house in the DFW area?
This really depends on your reasons for buying, as well as your long-term plans. As noted above, home prices in the Dallas housing market are showing some weakness. Most predictions and forecasts for 2023 suggest that prices will slow down considerably, and might even dip.
But such a decline would likely be short-term in nature. You might even think of it as a return to normalcy. The tremendous home-price growth of the past 18 months or so was abnormal, from a historical perspective. A slowdown in price growth, or even a short-term decline in values, would bring the Dallas real estate market back toward normalcy.
Home buyers planning a purchase during late 2022 or in 2023 should know that Dallas-area properties tend to hold their value over the long term. You can see this in the chart below, which shows the house price index going back more than 40 years.
On the other hand, buyers who think they might turn around and sell the home a few years from now should tread carefully. The Dallas real estate market appears to have reached the peak of its pandemic-fueled growth. As a result, there’s a chance that prices could level off or even dip over the next year or so.
Disclaimer: This article includes forecasts and predictions for the Dallas housing market extending into 2023. Such views are the equivalent of an informed opinion and should be treated as such. The publisher makes no claims or assertions about future real estate conditions.