While home prices across the country have seen eye-popping increases in recent years, and may seem overvalued in many markets, the values of Dallas-Fort Worth area homes are just about right. This is according to the most recent quarterly price report from the Wall Street firm Fitch Ratings.

The determination by Fitch that the DFW area has homes with “sustainable” prices is somewhat unexpected; in recent years, the firm had stated that these homes were overvalued. So what changed? Fitch Ratings Director Jian Mao tells the Dallas Morning News, “Dallas’ fundamentals have improved a lot, driven by strong rental growth, moderate increase in income, and decreasing unemployment.” According to the U.S. Bureau of Labor Statistics, from March 2021 to March 2022, the Dallas-Fort Worth area saw unemployment fall from 5.9% to 3.4%.

Surging Prices All Across the Nation

According to a recent report from the National Association of Realtors, about 70% of the metropolitan areas in the United States had home price gains in the double digits in the first quarter of 2022. Prices in the Dallas-Fort Worth area were up 21.8%, according to NAR data. While that’s not an insignificant increase, it’s considerably less than in many other places, such as the Florida areas of Punta Gorda, Ocala, and Lakeland-Winter Haven, which had respective increases of 34.4%, 33.8%, and 30.1%. Or even the 23.5% increase in home prices in Austin.

Taking Inflation Into Consideration

The rise in home prices in the Dallas-Fort Worth area should be viewed through the lens of rising inflation. In March 2022, Dallas-Fort Worth’s inflation rate was 9%, with the highest year-over-year increase the area has seen since 1981. Which is in line with the decades-high national inflation rate of 8.5%. Jian Mao reasons, “Nominal home price gains are declining and when adjusted to ‘real’ home prices by adjusting for inflation, the home price gains are much lower.”

Rents Are on the Rise

While the rental growth in the DFW area may be bad for the pocketbooks of renters, it offers a rosy outlook for real estate investors. Over the past year, rent prices in the Dallas-Fort Worth area have increased by 17.3%. With an occupancy rate of 93.2%.

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