The DFW Reset: A Softer Year, Stronger Decade, and Why Long Term Investors Should Pay Attention
Zillow’s newest report puts a number on what many in the Dallas–Fort Worth market have already felt: an estimated 87% of local homes saw their values dip over the past twelve months, compared with 53% nationwide. On its own, that statistic looks like a warning sign. But the broader picture tells a very different story. DFW is not a market in decline. It is a market normalizing after one of the biggest equity runs in modern housing history, and that reset is positioning Dallas as one of the most attractive long term plays among the major Sun Belt metros.
When you zoom out beyond the last year, the story becomes much clearer. Across the United States, the median homeowner is still up roughly 67% since their last sale. In Dallas–Fort Worth, most owners remain more than 50% above their purchase price, even after accounting for this year’s cooling. This matters because it reframes the meaning of the dip. The last five years lifted values in DFW so far above their pre-pandemic baseline that a mid single digit pullback barely dents the long term curve. In other words, what looks like a decline on paper is really a recalibration after unprecedented growth.
To understand the scale of that growth, it helps to compare DFW to the other big winners of the pandemic boom. Cities like Austin, Phoenix, Atlanta, Tampa, and parts of the Carolinas all experienced their own surges, but they are not correcting in the same way or with the same stability. Austin was the poster child of runaway appreciation, rising faster than almost any market in the country from 2020 through early 2022. But it is now giving back a meaningful portion of those gains, with an unusually high share of owners already underwater on recent purchases. Phoenix, another pandemic rocket ship, is seeing similar softness as investor driven activity unwinds.
Dallas–Fort Worth never climbed quite as vertically as those metros, but it climbed consistently, and that consistency is what has protected the region from the harsher corrections now hitting Austin and Phoenix. The DFW surge was powered by fundamentals rather than frenzy. Jobs, population inflow, business relocations, and a large, diverse economic base pushed demand upward in ways that were less speculative and more grounded. As a result, the cooling has been measured rather than painful. Prices have softened, but not collapsed. Equity has compressed, but not vanished. That balance is why Dallas now looks stronger than both its Sun Belt rivals and the slower Northeastern metros that avoided the pandemic spike entirely.
| Metro Area | 5-Year Growth (2020–2025) | Current 1-Year Trend | The Story |
|---|---|---|---|
| Dallas–Fort Worth | ~50–60% (Strong) | ▼ -0.5% – -3% | The Heavyweight Champ. Massive long-term gains. Currently taking a small breather but holding value well. |
| Austin, TX | ~45% (Volatile) | ▼▼ -4% – -7% | The Icarus. Flew too close to the sun. Prices skyrocketed but are now falling fastest in the nation, erasing recent equity. |
| Phoenix, AZ | ~55% (Strong) | ▼ -1% – -2% | The Speculator's Hub. Very similar to Dallas, but typically more volatile due to investor heavy activity. |
| Atlanta, GA | ~52% (Strong) | ▼ -3% – -4% | The Twin. Moving almost in lockstep with Dallas, but with slightly more inventory pressure right now. |
| Philadelphia, PA | ~30–35% (Steady) | ▲ +3% – +5% | The Tortoise. Missed the massive boom, so it is missing the bust. Slow, boring, steady wealth. |
| Cleveland, OH | ~40–45% (Surprising) | ▲▲ +6% – +14% | The Comeback Kid. Prices are spiking now because it is the last affordable place left. |
There is also a simple supply story that helps explain what is happening. Texas is now carrying some of its highest inventory levels in more than a decade. Active listings statewide are up significantly compared with prepandemic years, and Dallas–Fort Worth has more homes for sale than it did in 2018 and 2019. Builders across North Texas kept working through much of the rate hike period, so new construction is still delivering units into the market. This shift has broken the scarcity dynamic that defined 2020 through 2022. Buyers finally have options. Competition has cooled. Negotiation power is back on the table.
That increase in choice is why Dallas has become more favorable for disciplined investors in 2025 than it was at any point during the boom. Mortgage payments are roughly 6% lower than they were a year ago, a rare improvement in affordability at a time when many metros are still absorbing the lag from higher rates. More supply means fewer bidding wars. More reasonable pricing means stronger rent to price ratios. And a softer entry point in a still expanding metro is often more powerful for long term returns than a year of rapid appreciation.
This is where Dallas begins to separate from the pack. Consider the alternatives. In Austin, many buyers from 2021 and 2022 are now sitting on flat or negative equity. Phoenix is wrestling with investor pullback and slower population growth. The Midwest markets that are rising today are doing so from much lower bases, driven primarily by affordability rather than durable long term demand. Meanwhile, Northeastern cities like Philadelphia have barely moved at all over the last five years. They look stable because they never boomed, but they also never offered the wealth building upside that Dallas has delivered.
DFW sits in a rare middle ground. The market is soft enough to create opportunity, but strong enough to maintain its long term trajectory. It is affordable relative to the highest flyers, but dynamic enough to attract companies, workers, and families in large numbers. It is correcting in a way that restores balance without erasing value. That combination is unusual. It is also exactly what long term investors should look for.
If you focus on rental property, the picture becomes even clearer. The gap between owning and renting remains wide in Dallas, and the recent dip in values does not change the fact that the median household still struggles to afford a typical home here. That affordability gap supports rental demand, including in the Section 8 segment, where voucher holders compete for newer homes in good school zones. Because many would be buyers are effectively locked out of ownership for several more years, stable rental occupancy becomes even more likely.
Where does this leave the investor? In a better position than the headlines suggest. The correction has brought sanity back to pricing and pace. Inventory is giving you time to think and negotiate. Sellers are increasingly receptive to clean offers and realistic terms. And the long term case for Dallas has not changed. The metro continues attracting employers. The population continues growing. New housing continues arriving. And the region’s economic mix remains broader and more resilient than many Sun Belt peers.
If you are playing a one year game, the next twelve months may feel mixed. But if you are focused on a ten year horizon, this environment is one of the strongest entry points North Texas has offered since before the pandemic. The fundamentals have not disappeared. They have simply returned to a level that rewards patience and smart selection. For anyone who believes in steady population growth, job creation, stable rents, and long term demand for clean, well located single family rentals, the DFW reset is not something to worry about.
It is something to quietly take advantage of.