Dallas Housing Forecast for 2018: Is It Getting Back to ‘Normal’?

According to a new report from Realtor.com, Dallas is currently one of the hottest housing markets in the United States. But things might cool down a bit over the coming months. Recent forecasts for the Dallas housing market, extending into the fall of 2018, suggest that home-price appreciation will slow.

Here’s a look at the latest trends, predictions and projections for the DFW real estate market, stretching into 2018.

Realtor.com: Dallas One of the 20 Hottest Markets

On September 28, 2017, Realtor.com put out its latest list of the 20 “hottest markets for real estate” in the United States. The company’s economists look at a variety of indicators relating to housing supply and demand, and then rank the 20 cities or metro areas with the hottest markets.

By their estimation, Dallas, Texas was one of the hottest housing markets in the country for September 2017, appearing at #12 on their list. It’s been on the list for several months.

House prices in Dallas have risen steadily over the last couple of years. According to the real estate information company Zillow, the median home value in Dallas rose by nearly 8% over the last 12 months alone (ending in October 2017).

According to the North Texas Real Estate Information System, the average price for a single-family home purchased in the Dallas area reached $299,731 as of August 2017. That was 7% higher than the same month a year earlier.

A Real Estate Market Forecast for 2018

A recent Zillow forecast for the Dallas real estate market suggests that prices could slow down a bit over the coming months. The company’s 12-month outlook predicts that the median home value will rise by 4.1% between now and October 2018. That would be about half of the growth from the previous 12 months, by their estimation.

To put this in perspective, “average” home price growth over the last few decades is somewhere between 3% and 5%. So perhaps what we are seeing here is a normalization within the Dallas real estate market.

The nearly 8% growth recorded over the last year or so is abnormal, as it outpaces wage and income growth. That kind of depreciation is generally not sustainable over a long period of time, because it creates affordability issues within the housing market. So a slowdown of home prices within the Dallas real estate market could be viewed as a positive trend, from an economic standpoint.

Dr. James Gaines, chief economist with the Real Estate Center at Texas A&M University, recently echoed this sentiment in comments to The Dallas Morning News. According to Dr. Gaines:

“You still got a good [real estate] market, just a little slower than what we’ve seen recently. Things are getting back to normal.”

Inventory Still Tight Across the DFW Metro Area

Here’s another prediction for the Dallas real estate market in 2018. Home buyers entering the market next year will encounter limited inventory and stiff competition from other buyers. That’s the situation right now, and those trends will probably continue in 2018.

A so-called “balanced” real estate market is said to have around five to six months worth of supply. Recent reports showed that the Dallas metro area had a 2.3-month supply of homes for sale, as of September 2017.

This is partly why prices have risen so much over the last couple of years. There are plenty of buyers in the market, but limited inventory. Home values tend to rise steadily under such conditions.

The overall supply-and-demand situation in Dallas has been relatively flat over the last few years, but inventory increased a bit during 2017. Increased construction could create a better balance between supply and demand in 2018.

So while we expect to see (continued) constrained inventory conditions in 2018, buyers might have increased options when it comes to finding a home.

Here’s the general consensus among housing analysts and economists. The Dallas real estate market is hot right now, but it could begin to cool a bit over the coming months. While home prices are expected to continue rising into 2018, the year-over-year gains will likely be smaller than in the past. Translation: things might be getting back to normal after a couple of years of overheated growth.

Disclaimer: This article includes various predictions and forecasts for the Dallas, Texas housing market through 2018. These forward-looking statements were provided by third parties not associated with our company. The Home Buying Institute makes no claims or assertions regarding future housing conditions.