Stories about the strength of the Dallas-Fort Worth economy come a dime a dozen.
With major corporate relocations and brisk domestic in-migration, it’s a good time to be in Dallas — that is, if you have the coin.
All of this business activity has created a lot of demand in the housing market. The problem? Supply isn’t exactly keeping pace. While the market has softened somewhat in recent months, increases in both home prices and rents are about as common as rent-a-bikes.
Rose Fieroh, asks: “Where is the affordable housing (under $150,000) in the metroplex and (where are) affordable rents … again, under $800 a month. Perplexed!!!!”
The question was submitted to Curious Texas, an ongoing project from The Dallas Morning News that invites you to join in our reporting process. The idea is simple: You have questions, and our journalists are trained to track down answers.
We feel you there. Well, there’s good news and there’s bad news.
First, the good: North Texas Real Estate Information Systems, Inc. tracks home sale prices in different neighborhoods throughout the Dallas-Fort Worth area. According to NTREIS data, there are some areas where the median home sale price is under $150,000.
Unfortunately, there are only two such areas in the metro. Southern and southeast Dallas had median sale prices of $143,000 and $145,700 in the January-March 2018 quarter. And prices are going up even in those neighborhoods, reflecting a dearth of supply. Metro-wide, there are only 1.1 months of inventory on the market in the sub-$200,000 price group, a metric that indicates how long it would take to sell every home in a certain price range.
The median metro sale price is around $295,000. Even the first quartile home price is above $150,000. Only a quarter of homes for sale in Dallas-Plano-Irving went for below $221,000. For context, the median Dallas County income in 2016 was around $51,000.
Assuming a 20 percent down payment, moderate debt and a 30-year fixed-rate mortgage, a Dallas County resident on the median income can comfortably afford a house worth $141,200, according to Realtor.com’s housing affordability calculator.
Rents under $800 a month are about as scarce. The average monthly rent for a two-bedroom apartment in Dallas is $1,324, according to an analysis by RentCafe a rental listing site. Overall, the average rent is $1,156.
For average rents under $800, you generally have to look south and southeast, toward Kleberg, Wright Farms, Arbor Ridge and so on — neighborhoods on the edge of the city limits and generally in areas with relatively higher poverty and less access to public services and good schools. Only 29 percent of units rent for under $700 a month.
Homes and apartments weren’t always so costly, though Dallas does have a decades-long problem with income inequality. In fact, there were almost 900 Dallas-Plano-Irving homes listed under $50,000, let alone $150,000, as recently as 2011. That said, prices were low because the market was at the nadir of the recession.
This is what another News reader, Leonard Volk, a fellow emeritus of the American Institute of Architects who once served on an affordable housing committee for the institute’s Dallas chapter, seeks to find out. He asks: “Examine Dallas’s cheapest housing for the past ten years. Are we losing more of it than we are replacing? Where are the people going?”
We know this because the median home price has climbed for several quarters, evidence of price appreciation stemming from increased demand.
And the greatest price increases haven’t come at median and above-median levels. Rather, cheaper homes have seen prices rising at a faster pace. For instance, a quarter of homes listed for sale in the Dallas-Plan-Irving metro area in 2009 were below $95,000. In 2018, you have to increase your budget up to $221,000 — a 133 percent jump — to find just a quarter of homes listed for sale.
There’s also plenty of evidence of a labor shortage, increases in land prices and perhaps most importantly, price increases for materials like timber and steel — these material cost hikes are only getting more pronounced thanks to recently imposed tariffs.
All of these factors make it difficult for developers to replace increasingly pricey preexisting homes with fresh inventory.
The Trump administration also slashed the U.S. Department of Housing and Urban Development’s budget, ended some grants and reduced the money available for Low-Income Housing Tax Credit as part of the president’s tax reform bill. The tax credit goes to developers who build affordable units, and while some of the funding was restored by a March spending bill, it’s still not at pre-cut levels.
It’s also often difficult to find government-subsidized housing, especially without weathering a lengthy wait-list, and demand for such homes far outpaces supply. In 2015, there were almost 330,000 Dallasites who qualified for HUD-assisted housing with less than 50 percent of the area median income but were not living in such housing.
In short, the housing situation for lower-income individuals is dire. Experts say that builders recognize the pent up demand at affordable levels, but when fresh supply will enter the market for lower-income buyers is to be seen.