D-FW is expected to be the hottest real estate market of 2025. This is why

Dallas-Fort Worth is expected to be the hottest real estate market for investment and development next year.

The research collected data from more than 2,000 industry experts and their insights were used to provide a view on real estate investments, development trends and other real estate issues across the country.

Texas needs to build hundreds of thousands of new homes to combat shortages, the state report said

According to the report, D-FW earned the number one ranking due to its “enviable” post-pandemic recovery, size and continued demographic growth.

The total employment in the region has grown 11.2% since February 2020, the fourth fastest among all metro areas in the country. D-FW trails only Sunbelt peers in Raleigh, North Carolina; Charleston, South Carolina; and Austin, Texas.

The report also praises D-FW’s economic diversity. North Texas is home to 23 Fortune 500 companies, the fourth largest concentration in the country.

The metro has also delivered some of the best annualized five- and 10-year real estate returns of 7.9% and 8.8% respectively. It is the only Texas metro area with this distinction, the report said.

Moody’s Analytics estimates the relative cost of doing business in Dallas at 102% and the cost of living at 113% of the national average.

Median home prices in Dallas have risen almost 38% since the first quarter of 2020 to $382,000. That roughly equates to the national median sales price of just under $400,000, according to real estate company Redfin.

These home prices are approximately four to five times higher than the median household income in North Texas. The region is “not entirely affordable in absolute terms, but less unaffordable than most other major housing markets,” the report said.

The region’s affordability, growth and economic diversity must continue to attract new residents and businesses. However, the report warns that heat stress and fire could pose challenges to the metro in the coming years.

“Dallas continues to attract new businesses and residents who take advantage of our attractive economic climate, availability of new, highly skilled talent and premier developments. We are proud to be recognized as a top market and know our momentum will support the Urban Land Institute’s work to advance housing affordability and workforce development solutions created by our evolving landscape .” Tamela Thornton, executive director of ULI Dallas-Fort Worth, said in a statement.

Nationally, forecasts for 2025 are more confident than last year, but industry leaders remain cautious. Experts say the country is on the cusp of the next upswing in the real estate cycle. The consensus is that the recovery of the commercial real estate market will be slow and gradual.

Data centers dominate the real estate market, and the build-to-rent market may face a supply glut in the fast-growing Sunbelt markets.