Transcription
The housing market right now is slow, and that's both the pace of home sales but also the pace of construction certainly has slowed over the last couple of months.
The reason? An icing out of home buyers who balked at high mortgage rates that hovered near 7% over the beginning of this year, that as home sale prices were still at record highs, although many well under the original asking prices. The housing market right now is an affordability-constrained market. And that'll happen when you have home prices on a national basis go up 40, 45% during the pandemic housing boom.
But that means finally a bit more leverage for some of those willing to buy during this double whammy of higher mortgage rates and higher prices.
July 2025, Dallas-Fort Worth. Nearly 32,000 homes sitting empty on the market. Prices dropping for the first time in years. Sellers slashing prices by the thousands just to get a buyer through the door. This isn't a slowdown. This is a full-blown reversal. And the governor of Texas just declared property tax relief an emergency, not a priority, an emergency. Because what's happening in Dallas right now isn't just about real estate. It's about the collapse of the very thing that brought millions of people to Texas in the first place.
Five years ago, Dallas was the promised land. Low taxes, booming jobs, houses you could actually afford. People from California, New York, and across the country flooded in by the hundreds of thousands. Bidding wars broke out daily. Homes sold sight unseen. Investors bought entire neighborhoods. The median home price shot from $340,000 to $485,000 in just 3 years. But in 2025, that dream turned into a nightmare. Prices are now down nearly 5%. Homes are sitting on the market for months. And experts are predicting another 8% drop by next year. The same market that made Texas look unstoppable is now making the governor scramble to fix a crisis he didn't see coming. This is the story of how America's hottest housing market went cold and why what happens next in Dallas could determine the future of home ownership across the entire state of Texas.
Context and backstory. Let's rewind to 2020. The pandemic just hit. Remote work explodes overnight. And suddenly, people who were stuck paying $3,000 a month for a tiny apartment in San Francisco realized they could buy a 4-bedroom house in Dallas for half the price. No state income tax, lower cost of living, jobs pouring in from companies like Tesla and Oracle. Dallas became the escape route for anyone tired of California's prices and policies.
Between 2020 and 2022, over 220,000 people moved to the Dallas-Fort Worth area. Not in total, per year. That's more than the population of entire cities relocating to one metro area. And these weren't just any buyers. Tech workers on H1B visas with average salaries of $167,000. Remote workers from coastal cities bringing six-figure paychecks. Investors with cash offers ready to outbid everyone. Local buyers didn't stand a chance.
Dallas real estate agent Harrison Pski remembers those years clearly. He watched homes that would normally take weeks to sell go under contract in hours. Buyers waved inspections. They offered tens of thousands over asking price. Some never even saw the property in person before signing. The frenzy was so intense that between March 2017 and May 2025, the median home value in Dallas nearly doubled, from $185,000 to $331,000. That's a 79% increase in 8 years.
But here's the thing about booms. They don't last. And the bigger the boom, the harder the crash.
The boom phase. 2021 was chaos. Pure, unfiltered chaos. If you had a house to sell in Dallas, you were basically printing money. Multiple offers on day one. Buyers writing emotional letters to sellers begging them to choose their family. Escalation clauses where people agreed to pay $10,000, $20,000, even $50,000 more than anyone else just to win the deal. Mortgage rates were at historic lows. You could lock in a 30-year loan at under 3%. That meant a $400,000 house only cost you about $1,700 a month. People could afford way more house than ever before, so they bought and bought and bought.
Dallas's inventory of available homes dropped to record lows. In May 2021, there were only 6,100 homes for sale in the entire Dallas-Fort Worth-Arlington metro area. To put that in perspective, that's a region with a population of over 7 million people. There were literally more people moving to Dallas every month than there were homes available for them to buy.
Real estate investors saw the opportunity and went all-in. Hedge funds, private equity firms, individual landlords. They started buying up single-family homes in bulk and turning them into rentals. Why? Because rents were skyrocketing, too. If you couldn't afford to buy, you still had to live somewhere. So, landlords could charge whatever they wanted, and people paid it.
By May 2022, Dallas home prices peaked at $485,000. That's up from $340,000 just 3 years earlier. Everyone was winning. Sellers were cashing out. Investors were building portfolios. Even people who bought at the top thought they'd made a smart move because prices just kept going up month after month after month.
And then everything changed.
The catalyst turning point. It started quietly, too quietly for most people to notice at first. The Federal Reserve began raising interest rates in March 2022. Just a quarter point at first, then another, and another. By mid-2023, mortgage rates had gone from under 3% to over 7%. That $400,000 house that cost $1,700 a month, now it was $2,700 a month. Same house, same price. But suddenly, way fewer people could afford it.
Buyers started pulling back. Not because they didn't want homes, but because they literally couldn't make the math work anymore. First-time buyers got priced out completely. Even people who thought they were ready to upgrade found themselves stuck. If you had a 3% mortgage on your current home, why would you sell and buy something new at 7%? You'd be paying double the interest for the same amount of money. So, people stopped selling.
And the few who did sell found a market that looked nothing like the frenzy they remembered. No more bidding wars, no more waived inspections. Homes started sitting on the market for weeks, then months. Price cuts became common. Desperation started to set in.
But here's where Dallas's story gets really interesting. Because while demand was falling, supply was about to explode. Remember all that construction that got approved during the boom years? All those permits that developers rushed to file when they thought the party would never end. Those homes were about to flood the market all at once.
Escalation. Crisis unfolds. By late 2024, the warning signs were everywhere. Active listings in Dallas started climbing. Not just a little, they surged. In July 2024, there were around 20,000 homes for sale. By July 2025, that number hit nearly 32,000. That's a 60% increase in just one year, the most inventory Dallas had seen since the tail end of the Great Recession in 2011 and 2012.
New construction kept coming online. Texas had been building more new homes than almost any other state for years. Those projects couldn't just stop. Builders had contracts, loans, deadlines. So, even as demand dried up, thousands of brand-new homes kept hitting the market every month.
At the same time, sellers who had been waiting for rates to drop finally gave up. They'd been holding off for over a year, hoping the Fed would cut rates and bring buyers back. But by mid-2025, it became clear that rates weren't coming down anytime soon. So, they listed anyway. Better to sell at a discount than keep paying the mortgage, property taxes, and insurance on a house they no longer wanted.
And oh, the property taxes. Between 2019 and 2024, Dallas homeowners saw their property taxes jump by 41%. Not because the tax rate went up, but because home values had skyrocketed. In Texas, property taxes are based on your home's assessed value. So when prices doubled, tax bills doubled, too. People who thought they could afford a $400,000 house suddenly found themselves paying $12,000 or $15,000 a year in property taxes alone.
Insurance costs exploded, too. Texas saw a wave of natural disasters, hurricanes, floods, freezes. Insurance companies started pulling out of the state or jacking up premiums to cover their losses. Homeowners' insurance that used to cost $1,500 a year was now $3,000 or $4,000. And if you lived in a flood zone or near the coast, forget it. You were paying even more.
The math stopped working. Even if you could afford the mortgage at 7% interest, the combination of property taxes and insurance made home ownership crushingly expensive. People who bought at the peak were now underwater, not because their home lost value, but because the cost of owning it became unsustainable.
By May 2025, home prices in Dallas officially started dropping, down 3.4% year-over-year, the second biggest decline in the country. Only Oakland, California fell harder. By August, prices were down another percent, and forecasts predicted they'd drop another 7 to 8% over the next 12 months. Sellers panicked. Listings with price cuts became the norm. In April 2025, 33% of homes sold for less than the asking price. Compare that to just 20% selling above asking price. The power dynamic had completely flipped. Buyers now had all the leverage, and they knew it.
Personal impact stories. Meet Sarah. She's a retired teacher who moved to Dallas in 2021 from California. She sold her condo in Los Angeles for $650,000 and bought a beautiful townhouse in North Dallas for $425,000. She thought she'd made the smartest financial move of her life. Lower cost of living, no state income tax, more space. She even had money left over to invest.
Then 2024 hit. Her property taxes jumped from $8,500 to nearly $12,000. Her insurance doubled from $1,800 to $3,600. She didn't change anything about her home. The market just decided it was worth more. So now she's paying an extra $5,000 a year just to keep living in the same house on a fixed retirement income. That's devastating. She's considering selling and moving to a cheaper state, but her home is now worth less than she paid for it. She's trapped.
Then there's Marcus. He's a software engineer who moved to Dallas in 2022 for a tech job. He bought a new construction home in Frisco for $520,000 with a 6.5% mortgage. He figured he'd refinance when rates dropped, but rates never dropped. And now there are five other homes on his street for sale. All of them are listed for less than he paid. His neighbor just sold for $480,000. That's a $40,000 loss in less than 3 years. Marcus isn't planning to move anytime soon. But knowing he's underwater eats at him every single day.
Or take Jennifer and Michael, a young couple who saved for years to afford their first home. They finally scraped together a down payment in early 2025. They thought the market was calming down. They'd have a shot. But even with prices dropping, they still can't afford it. With a 7% mortgage rate, property taxes, and insurance, the monthly payment on a $350,000 starter home is over $3,000. They make good money, combined income of $110,000. But after taxes, student loans, and basic living expenses, they can't make it work. So, they're renting, watching prices fall, hoping they'll drop enough to finally make home ownership realistic.
Institutional response, blame game. By early 2025, the political pressure was building. Texans were furious. Property tax bills were crushing families. Housing affordability was in freefall. And people wanted answers. They wanted someone to fix it.
Governor Greg Abbott saw the writing on the wall. In February 2025, during his State of the State address, he declared property tax relief an emergency item. Not a priority, not something they'd get to eventually. An emergency. That language matters. It means the legislature can act on it immediately without waiting for the normal legislative process. Abbott knew the optics were bad. Texas had spent years advertising itself as the affordable alternative to California and New York. But now homeowners in Dallas were paying more in property taxes than some people in high-tax states paid in total housing costs. The Texas dream was falling apart. And if they didn't act fast, voters would remember it.
The legislature scrambled. They passed a $10 billion property tax relief package in June 2025. It included increased homestead exemptions, special relief for seniors over 65, and cuts for small businesses. Lawmakers held press conferences. They celebrated. They told voters help was on the way.
But here's the problem. Property tax relief doesn't fix a crashing housing market. It helps people who already own homes pay their bills. But it doesn't bring buyers back. It doesn't stop prices from falling. And it doesn't undo the damage done to people who bought at the peak and are now underwater.
Real estate experts weren't impressed. Economist Amy Nixon pointed out that the affordability crisis went way beyond property taxes. The real issue was the combination of high home prices, high mortgage rates, and high insurance costs. Cutting property taxes by a few thousand a year helps, but it doesn't change the fact that buying a home in Dallas right now requires a six-figure income and a massive down payment.
Critics also noted the timing. Abbott had been in office since 2015. Property taxes had been a complaint for years, but it wasn't until the housing market started crashing and people started panicking that he declared it an emergency. To many, it felt like too little, too late, a political move to save face while the market burned. And the housing market kept falling.
Climax. Public outburst. June 16th, 2025. Governor Abbott stood in front of cameras in Denton, Texas, surrounded by lawmakers and local officials. He held up foreclosure notices, price cut listings, tax bills. His voice was sharp, frustrated, almost angry. "Texans are being priced out of their own state," he said. "This is unacceptable. We've built Texas into the economic powerhouse of America, and we will not let runaway costs destroy what we've built." He slammed the papers down on the table in front of him. The message was clear. He was mad. The state was mad, and something had to be done.
But to many watching, the outrage felt hollow. Where was this anger in 2021 when prices were skyrocketing? Where was this urgency in 2022 when property tax bills started crushing families? Where was the emergency declaration when people were losing bidding wars and getting priced out by investors? The truth is, the governor's anger came only after the market had already collapsed. Only after prices started falling. Only after it became a political problem for homeowners drowning in costs. His frustration didn't feel like solidarity. It felt like damage control.
Real estate agents on the ground saw it differently. They knew the market was in trouble. They'd been warning clients for months to be realistic about pricing, to expect longer listing times, to prepare for negotiations. But nobody at the state level wanted to hear it because as long as prices were high, Texas could brag about being the hottest real estate market in the country. Now that the bubble had burst, everyone wanted to point fingers. Developers blamed lenders. Lenders blamed the Federal Reserve. The Fed blamed inflation. Homeowners blamed investors. Investors blamed regulations. And politicians blamed everyone but themselves. Meanwhile, 32,000 homes sat empty on the market in Dallas, waiting for buyers who couldn't afford them.
Consequences, falling action. By August 2025, the data was undeniable. Dallas home prices were down 4.6% year-over-year. The average home value had dropped to $315,560. That's a long way from the $331,000 peak. And forecasts showed no sign of a rebound. Real estate data firm Reventure predicted prices would fall another 7.8% over the next 12 months. Nick Gurley, CEO of Reventure, didn't mince words. He called the Dallas market overvalued by 22%. He said prices would likely keep falling for another year or two before hitting bottom.
For sellers, that's a nightmare. For buyers, it's still not enough. Homes were taking longer to sell than they had in over a decade. The median time to close hit 105 days in the first quarter of 2025. During the boom, homes sold in days. Now, they sat for 3 and a half months. And even then, many didn't sell. They just got pulled off the market or relisted with even bigger price cuts.
The rental market didn't offer much relief either. Landlords who bought properties during the boom were now stuck. They'd purchased homes expecting prices and rents to keep climbing, but rent prices started dropping, too. Vacancy rates climbed, competition increased, and suddenly being a landlord in Dallas wasn't the easy money it used to be.
For people trying to sell and move out of state, the reality was brutal. If you bought in 2022 or 2023, there's a good chance your home is now worth less than you paid for it. If you need to sell, you're either taking a loss or waiting it out and hoping things get better. But hope isn't a strategy. And every month you wait, you're still paying the mortgage, taxes, and insurance on a depreciating asset.
First-time buyers, the people who were supposed to benefit from falling prices, still couldn't get into the market because even though prices dropped, the cost of ownership hadn't. A $315,000 home with a 7% mortgage plus property taxes and insurance still costs nearly $3,000 a month. For someone making $70,000 or $80,000 a year, that's out of reach.
The Texas housing market was broken. Not just in Dallas, Austin, San Antonio, Houston. All of them were seeing similar trends. Rising inventory, falling prices, longer listing times, frustrated sellers, and cautious buyers. The irony wasn't lost on anyone. Texas had spent years mocking California's housing crisis, and now they were building their own.
Reflection, closing, and moral. So, what happened here? How did the hottest housing market in America turn into one of the fastest-falling markets in the country? It started with success. Dallas became too good at attracting people. The population exploded. Jobs poured in. Developers rushed to build. Investors bought up everything in sight. Prices climbed so fast that locals got priced out of their own city. And when the music stopped, there was no one left to catch the falling pieces.
The pandemic boom wasn't sustainable. It never is. But people believed it anyway. Buyers thought prices would keep going up forever. Sellers thought demand would never dry up. Developers thought construction could never outpace growth. They were all wrong. And now Texas is facing a problem it's not used to. A housing market in decline. Families underwater on their mortgages. Retirees crushed by property taxes. First-time buyers still locked out. And a governor scrambling to fix a crisis that's been building for years.
The property tax relief package helps, but it's not a solution. It's a band-aid on a bullet wound. The real issues are structural. Too much supply, not enough demand, high interest rates, expensive insurance, and a state that built its entire identity on being affordable only to price out the very people it was trying to attract.
Dallas's story isn't unique. It's happening across the Sun Belt in Phoenix, in Austin, in Nashville. Everywhere that became the hot new destination during the pandemic is now dealing with the hangover. The question is, what happens next? Some experts think prices will stabilize by late 2026. Others think the correction will last years. It depends on interest rates, on the economy, on whether people keep moving to Texas or start leaving for cheaper states. Nobody knows for sure.
But one thing is clear. The days of easy money in Texas real estate are over. The bidding wars, the sight unseen offers, the double-digit price gains. That era is done. And for a lot of people, the dream they chased to Texas is now the burden they're stuck with. The Texas housing market didn't crash overnight. It died slowly. One rate hike at a time, one property tax bill at a time, one unsold listing at a time. And by the time the governor declared it an emergency, the damage was already done. This is the story of how America's hottest housing market went cold and why the people who were supposed to win ended up losing everything.
If this breakdown opened your eyes to what's really happening in Texas, hit that subscribe button because this story isn't over. And neither is the fallout. More market crashes, more political drama, more stories that shape the cities we live in. They're all coming, and you'll want to see what happens.