Looking for a rent vs buy calculator for Dallas TX? You’ve come to the right place. Choosing whether to buy or rent can be a difficult decision. Ultimately it boils down to your circumstances and preferences. There are plenty of Dallas homes for purchase or rental. To help you with your Dallas Texas rent vs buy decision here are some calculations for housing costs in the Dallas area. With pandemic-era distortions the affordability equation might be surprising. My advice is to run your own numbers and consider the source of any recommendation.
The Cost to Rent in Dallas TX
Looking at third quarter 2024 closed single-family leases in Dallas Texas, here are the average rents paid:
- 2-bedroom 1-bath – $2,102 per month
- 3-bedroom, 2-bath – $2,500 per month
- 4-bedroom, 2 bath – $2,632 per month
- 4-bedroom, 3 bath – $4,867 per month
The good news for prospective Dallas Texas home buyers or renters: You have choices. There are plenty of options available in the Dallas market. The prices might be a different story.
Cost to Buy in Dallas TX
Here’s what home buyers paid on average for purchasing a Dallas Texas home in the third quarter of 2024:
- 2-bedroom, 1-bath – $274,007
- 3-bedroom, 2-bath – $446,537
- 4-bedroom, 2-bath – $399,444
- 4-bedroom, 3-bath – $917,750
To see how much the purchase cost compares to the monthly rental rates shown above, let’s take that 3-bedroom, 2-bath home price and crunch some numbers. Assuming you put 20 percent down on that 3-bedroom Dallas home with a mortgage rate of 6.5 percent, this is what it might look like.
- $2258 – Principal and Interest on $357,230 mortgage (20% down payment, 6.5% 30-yr fixed)
- $768 – property taxes ($9,216 annual bill with your $100,000 homestead exemption)
- $168 – hazard insurance (0.5% of property value annually)
- $ 100 – homeowners association ($1200 annual HOA bill)
- $ 100 – miscellaneous repairs
- $3,312 – Total Estimated Monthly Expense for Ownership
Even if you strip out the allowance for miscellaneous repairs, the cost of buying a 3-bedroom Dallas Texas home is more expensive than renting a comparable property. Accounting for maintenance expenses and HOA fees, renting a home is significantly less expensive for Dallas residents in 2024.
Property tax rates can vary depending on your Dallas address. The example cited above includes the taxing enties of Parkland Hospital, Dallas County, Dallas Community College, the city of Dallas and Dallas ISD.
If you are looking for smaller, less expensive townhomes or condos be prepared for higher HOA fees. It is possible to find many Dallas homes without an HOA. Townhomes and condominiums might have a lower purchase price, but the HOA fees can cost you several hundred dollars per month.
Dallas TX Housing Affordability
The rapid increase in home prices seen in the DFW area during the past several years has certainly affected the rent vs buy equation. Joining the property ladder has become quite expensive in North Texas. Home price inflation has exceeded rent inflation in most DFW housing markets in recent years. The Atlanta Fed’s Home Ownership Affordability Monitor provides a good breakdown of the real costs of buying a home in the Dallas metro area.
Note! Third party aggregator sites often publish rent or buy calculations using flawed methodology. It is important to look at the methodology or assumptions used. If you can’t see all of the underlying assumptions or methodology, the results aren’t very useful. Many real estate websites attempt to make buying a home look more affordable than it really is, particularly if they are in the business of selling ads to Realtors.
Do Your Own Due Diligence
I would encourage any prospective home buyer or renter to do their own research and crunch the numbers, paying particular attention to the property tax obligations for local homes. While Texas does not have a state income tax, we do have property tax rates which are far higher than the national average. That remains true even after the property tax compression passed by the state legislature in 2023.
Real estate is always local, so it pays to do your own research and decide what’s best for you and your budget. If you have a good down payment and solid credit you will probably be better off purchasing a Dallas Texas home rather than renting. The rent vs buy decision is not always as easy as some people make it seem. It often boils down to personal choice. To see what’s available in the local Dallas market call or email today.
The Rent vs Buy Tradeoff
Renting a home does offer a few advantages. Flexibility and mobility are near the top of that list. There’s also the added bonus of having no maintenance since the landlord is generally responsible for repairs and upkeep of the property. If you are fortunate enough to save some money with your rent, you might be able to invest those savings in the market as an inflation hedge.
Buying a home can still be a great option. The purchase of a home can be a good store of value and an inflation hedge. One of the key benefits of home ownership for many families is that single-family homes often act as a fixed savings account. The magic of a fixed-rate mortgage over 30 years is an incredible gift for many homeowners. Patience and consistency with monthly payments generally results in equity appreciation over time. Of course there’s also the benefit and freedom of knowing you own your Dallas home. You can work on it, remodel it or decorate to your own liking and taste.
If you are looking to buy or rent your next home in Dalllas Texas or the DFW metroplex, give us a call!