Buying a house in Dallas: A how-to

Everything’s bigger in Texas, including the appeal of the Lone Star State’s biggest metro area. The Dallas–Fort Worth area was the fastest-growing metro area in the entire country between July 2020 and July 2021, according to data from the U.S. Census Bureau. If you’re thinking about buying a home in Dallas, read on for everything you need to know.

Why buy a house in Dallas?

There are loads of reasons to plant permanent roots in Dallas, and one of the biggest lures is the bump you’ll see in your bottom line here. Dallas is a relatively cheap place to call home compared with other major metro areas in the U.S. — for example, it’s 32 percent more affordable than Los Angeles and 20 percent more affordable than Chicago, according to Bankrate’s cost of living calculator. Not only will you spend less to live here, you’ll also find more opportunities for professional growth; more than 20 Fortune 500 companies are headquartered here.

While there is plenty to be excited about in the present, buying a home in Dallas looks like a smart investment for the long-term future as well. Population forecasts point to the metro area surpassing the 10-million mark sometime in the 2030s — a massive increase from the 7.6 million people counted in the 2020 Census. As more people move here, home values will likely rise. So, down the road, you shouldn’t have much trouble selling your place or renting it out.

Find a Dallas home for your budget

If you’re just starting to look at the Dallas area, you have a lot of ground to cover — literally. The metro area covers more than 9,000 square miles and includes 11 counties. Before you start your search, get a solid understanding of how much house you can afford with Bankrate’s new-house calculator. With that number in mind, you can figure out where in Dallas your dollars can stretch the furthest.

If you want to live in the center of it all in Dallas County, data from the MetroTex Association of Realtors shows median prices at $350,000 as of October 2022. However, if you head west to Parker County, median prices jump to more than $457,000. (If you have a high-priced home in mind, it’s important to consider the conforming loan limits in the Dallas area, too. To borrow more than the county limit, you’ll need to look for a jumbo loan, which comes with stricter credit requirements and a bigger down payment.) Looking for a bargain? Your best bet is to look further south and east to Van Zandt County, where median prices are $250,000 — a 4.8 percent year-over-year decrease.

The price tag of an actual house isn’t everything, though. With such a wide range of urban neighborhoods and far-reaching suburban sprawl, think carefully about what you really need in a home. Are you single and looking to enjoy the city’s nightlife? Start by checking out Deep Ellum and Uptown, where you’ll feel the youthful vibe. Are you thinking about starting a family? A suburb like Plano, Richardson or Coppell will offer the growing space you need. While you don’t have to buy a forever home in Dallas, it is smart to aim to buy one that will accommodate you for at least the next five years. After all, no one loves moving more than they need to, and no one wants to pay multiple sets of closing costs.

Is now a good time to buy a house in Dallas?

Today’s shifting economy might make you wonder whether you should buy a house now or wait. On one hand, high mortgage rates make it a tough time to buy. The record-low mortgage rates that dominated much of 2020 and 2021 are now a distant memory. On the other hand, if you’re OK with locking in a rate approaching 7 percent, it’s a good time to be a buyer in Dallas. More inventory is sitting on the market for a longer period of time these days, and Redfin data shows that an increasing number of sellers are dropping their prices. Available inventory has increased in every county in the metro area, according to the MetroTex Association of Realtors. All told, this means more options to choose from, with less competition as more buyers sit on the sidelines.

Things to know about buying a house in Dallas

How long will your commute be?

There are a lot of words to describe Dallas, but “walkable” isn’t one of them. With such a huge expanse of space, it’s important to think about your daily routine. If you’re working from home, you’re in good shape. However, if you have to arrive at your downtown office every day at 8 a.m., you might not want to deal with the 27-mile morning commute from Colleyville. It’s also worth looking into public transportation: DART, or Dallas Area Rapid Transit, covers 93 miles and 65 stations.

How much will you pay in closing costs?

In addition to stashing away money for a down payment, you’ll need to budget for your portion of the closing costs. In 2021, closing costs in Texas added up to 1.5 percent of the purchase price, according to figures from ClosingCorp. On a $350,000 home, which is the median sale price in Dallas County, that comes out to an additional $5,250. However, you can reduce your closing costs in two ways: Ask the seller to cover the title insurance policy (which is fairly standard anyway in Texas), and shop around for the best lenders in Dallas–Fort Worth to find one that won’t charge fees.

How much will you pay in property taxes?

It’s important to budget for property taxes when buying a house in Dallas — since there are no state and local income taxes here, property taxes are fairly high. They vary widely based on where in the area you live. In Dallas proper, the average property tax bill came out to just over $6,000 in 2021, while the average bill in Collin County topped $7,100. Be sure to ask a seller for property tax bills from the past few years to estimate your bill and understand how much it might increase from year to year.

What else will you need to pay for as a homeowner?

Texas is known for being dry and hot, but the winter storm of February 2021, which wreaked havoc on the state, is a reminder that unexpected accidents happen. That one storm tallied up more than $10 billion in damages, according to data from the Texas Department of Insurance. As you think about buying a home in Dallas, make sure you budget for adequate protection.

How safe are the neighborhoods where you’re looking?

Like any major urban area, Dallas has its share of criminal activity. However, CrimeGrade gives the area a much better mark than many comparable cities. Make sure you research the neighborhoods on your radar, go there at all different times of day and think about how comfortable you feel there.

Tips for buying a house in Dallas

Save for a down payment

The average down payment on a new home in Texas was $31,750 in the spring of 2022. However, you may be able to contribute a significantly smaller sum of cash toward your upfront payment. Borrowers with excellent credit may qualify for a loan that requires a down payment of only 3 percent of the purchase price — just $10,500, based on median home prices in Dallas County. And if you have less-than-perfect credit, FHA loans require 3.5 percent of the purchase price, which adds up to $12,250 of the median Dallas home price.

Still, those five-figure sums can feel overwhelming, especially if you’re not earning a huge salary. There are ways to buy a house on a low income, though, such as the Dallas Homebuyer’s Assistance Program. The program is geared toward low- and moderate-income borrowers and offers up to $60,000 of assistance in the form of a forgivable second mortgage. Be sure to explore national down payment assistance options, too. And if you’ve never owned a home before, think about Texas programs for first-time homebuyers, which may be able to make this big expense more manageable.

Find a local Dallas real estate agent

Don’t try to buy a house in Dallas on your own. Instead, find a knowledgeable local real estate agent who can help you make sense of this confusing market and steer you toward neighborhoods and listings that meet your needs. Realtors do this every day, and they can help you avoid mistakes, such as offering too much money or waiting too long to make an offer. They can get you in to see homes and negotiate contracts, too, and most have a strong network of experts you might need, such as home inspectors, real estate attorneys and contractors.

Get preapproved for a mortgage

Before you start searching for a home, be sure to get preapproved for a mortgage. Any seller will need to see your preapproval letter to take your offer seriously. It doesn’t take much to get one of these — in fact, some lenders will issue one via an automated system in just 15 minutes.

Understand the playing field

As you enter the market, it’s important to have a good sense of who you might be competing against. Dallas has been a big hub of iBuying activity throughout the pandemic. In fact, the DFW metro area ranked third in the country for iBuyers in the first quarter of 2021, with nearly 5 percent of all purchases made by real estate investment companies like Opendoor and Offerpad.

However, times are changing. Those company-backed, all-cash offers aren’t going to be as prevalent in 2023, due to higher interest rates and a housing market that is quickly cooling off. Zillow and Redfin, previously two of the biggest iBuying players, have both shuttered their iBuying services.

Even for regular individual buyers, the days of mostly above-asking-price offers and bidding wars are gone. Inventory is on the way up, and sellers are having to drop prices. Translation: Buyers are not at the mercy of the seller anywhere near as much as they used to be.

Bottom line

Whether you’re relocating from a thousand miles away or you’ve been renting and are finally ready to become a homeowner, 2023 may be the right time to buy a house in Dallas. While prices in the metro area increased throughout the pandemic, the shifting market is allowing buyers more leeway to negotiate. Ready to make a big move to the “Big D”? Figure out if it’s the right time for you to buy a house, and use Bankrate’s mortgage calculator to get your budget in line.