The city of Dallas has a thriving economy made up of a variety of sectors. Dallas-Fort Worth is the fourth busiest airport and is one of the most popular hubs for business travels. It is also home to nine Fortune 500 companies and the Kay Bailey Hutchison Convention Center — the country’s largest and busiest convention center and the world’s single-largest column-free exhibit hall. The city is considered one the fastest growing areas in the country based on job growth with a 3.3% increase compared to previous year and it’s predicted to grow up to 45.1% over the next ten years — higher than the US average. Because of this, more people, especially millennials, are moving to this developing job hub. Its population grew up to 1.9% in the previous year and is projected to grow around 18% by 2029 — the biggest population surge in the country this decade.
With the COVID-19 pandemic, some people were given a chance to have a flexible working situation and start working from home. This also affected the surge in the city’s population. The majority of the people relocating want to get closer to their families and farther away from the higher income taxes of other cities, such as New York and San Francisco. Also, lakefront houses have become popular as residents now want to go on vacation without actually having to get on a plane.
Several of you may want to follow that path, some may want to be closer to your families, or a few may move for more job opportunities, but before doing so, you have to know how much does it cost to build a house in Dallas and what are the aspects that you need to consider.
The Cost of Building a Custom Home in Dallas, Texas
According to the National Association of Home Builders (NAHB), the national average for building a new home is priced at roughly $394,300. This price can increase and decrease depending on location, size, and design used. According to HomeGuide, the average cost of low-end homes are $178,000. Mid-tier and high-end luxury homes are priced at $248,000 and $416,000, respectively.
Texas is part of the country ‘s southern region, and the average price of homes is estimated to be around $100 per square foot — the lowest compared to other regions that are estimated to be around $109-$155 per square foot.
In Dallas, the < /span> average price to build costs around $100 to $155 square feet — approximately $200,000 to $310,000 for a 2000 square-foot home. Mid-tier homes are more expensive by 61%-100% than value-conscious homes ranging from $200-$249 per square foot — around $800,000 to $1 million for a 4000 square-foot home. Luxury homes start at $250 per square foot and are by far the most expensive, with the price tag quickly rising depending on its personalization — roughly $1,750,000 for a 7000 square-foot home which is the average size for these kinds of houses.
As mentioned earlier, the price can increase or decrease depending on the size, location, and design.Besides that, multiple factors will still come into play before you can have a definitive answer to this question, including permits, builders and architectural fees, and many more.This may seem a lot, but to help you fully grasp the details, we have divided these factors into two categories: hard costs and soft costs.
Hard Costs
Hard costs involve aspects that are related to the actual building of the structure. In today’s context, there is a trend of rising construction costs with an estimate of a 16% rise in prices. In total, the median price of building a home in Dallas is estimated to be around $263,400 with a price of $150 to $250 per square foot. On average, the price per square foot is $172. With these statistics, it provides another point to consider whether it is the best option for you to build a home in Dallas. The trending increase of prices plays a significant role in decision making on which cities are the best to build and Dallas is no exception. Lastly, another data suggests that building a basic custom home can come as cheap as $115.31 per square foot for basic construction, and a 2,000 square foot home may cost a grand total of $230,620.
Figure 1. Typical cost breakdown of a single-family home constructed using the conventional method,according to Home Builder Digest.
Pool Additions
Dallas has humid, subtropical weather, and summers here can be quite brutal, with dry winds and an average temperature of 100°F that can soar up to 117°F. Residents cool off by going to gyms with swimming pools or lakes to have a nice, refreshing dip. Though it’s still different when you have your own oasis on your property.
Although it can be quite costly, it can provide the privacy you need while adding value to your home. It can also serve as an entertainment space for barbecue Sundays, an avenue to improve your overall cardiovascular health, or just a relaxation spot in your home. The price for pool additions in Dallasstarts at $1000 and may increase up to $78,000, depending on the size and pool type, and the cost of each is as follows:
- Above Ground Pool : $1000-$6000
- Fiberglass (Inground) Pool: $5000-$40,000
- Inground Pool: $5000-$78,000
Even though it is more expensive, inground pools are the most common and the standard choice as they add the most value to your home. If you’re on a budget or just going for a value-conscious pool, going for an above-ground pool is the best choice for you as it costs the least compared to the other pool types — uses fewer materials and takes less time to install. Its labor cost should also not exceed $3500, while the inground pool labor costs range from $2 PSF to $6 PSF.
Architecture and Design Fees.
The same concept applies to the architectural and design fees. From cost-efficient to luxury residences, the price depends on the type of home clients wish to have. High-end houses will have higher design fees while cost-efficient homes prioritize the basic necessities that will allow the house to operate. Modern, custom designs can increase the total price to an estimate of $201,000 to $310,000. This considers the home’s size and floor plan along with the numerous furnishings the homeowners plan to include. The breakdown involves a price of around $15,000 – $80,000 for full architectural services which make up 5% to 20% of the total construction costs while design fees carry an estimated price of $95.41 per hour which includes material sources that the designers will provide.
Scott Marek of Marek Architecture gave general information regarding Architectural fees. The architectural fees for base design and documentation services usually range between $6 PSF to $10 PSF of total building area depending on the size and complexity of the project. For more involved design, detailed sets of drawing, and involvement during construction, this value increases and may vary between 8-12% of the total building costs of the project.
Permits and Other Fees
Moving on to the permit fees, Dallas has a master permit fee that starts at $100. From there, site plan reviews have a price of around $50 per square foot which is subject to increase depending on the home’s size. Aspects such as home additions and amenities can further increase the total price of the development process, leading to a more expensive permit fee. According to a file from the City of Dallas, any additional fees charged during the plan review must be settled before the issuance of the permits. This adds another layer of decision-making that homeowners have to consider for their homes. Lastly, according to HomeAdvisor, homeowners typically spend around $427 and $2,234 for permits, averaging a price of $1,305. Some prices may rise up to $7,500 while small cities can go as low as $150.
How do the custom home building costs in Dallas compare to nearby
cities?
Figure 3. Comparison of median price PSF for single-family homes between various major metro cities in Texas in 2021, according to the Texas Real Estate Research Center at Texas A&M University.
According to the US Census Bureau, fourteen states are included in the country’s southern region — Texas, Oklahoma, Arkansas, Louisiana, Kentucky, West Virginia, Virginia, Tennessee, North Carolina, Mississippi, Alabama, Georgia, South Carolina, and Florida. Homes here are estimated to have a price of $100 per square foot, which is the lowest value compared to other regions. Florida and Virginia have the most expensive home value per square foot among the 14 states. Florida homes roughly cost $167 per square foot, and Virginia costs around $163 per square foot, as reported by Business Insider. Home values in Texas are 26%-30% significantly lower than Florida and Virginia at $129 per square foot and are considered mid-tier compared to other regions in the southern USA.
In September 2020, the average home value in Dallas was priced at $237,000 that increased to $282,195 in September 2021 — an 18.9% increase, according to Zillow. Home values in the city’s affluent and mid-tier neighborhoods also continue to rise as the economy recovers. The median value for each and its rate of increase/decrease compared to the previous year’s deals are as follows:
- Knox Henderson: $485,000, a 12.8% increase
- Old East Dallas: $480,000, a 21.5% increase
- Main Street District: $312.684, a 4.8% increase
- Vickery Place: $650,000, a 20.4% decrease
- Highland Hills: $196,000, a 41% increase
- South East Dallas: $180,000, a 12.5% increase
- Riverway Estates-Bruton Terrace: $203,000, a 14.7% increase
According to the data gathered from recent building permits for new construction of single-family dwelling homes in Dallas’ nearby cities from the online contractor platform Buildzoom (BZ), the cities have an average value of $473,565.23. The cities included and their respective media price are as follows:
- Irving: $391,353.50
- Plano: $463,500
- Cedar Hill: $416,206
- Keller: $623,201
To further support these values, we also gathered data from Zillow, a real estate marketplace, to give an insight into the average price of mid-tier homes in nearby cities. Irving reportedly has a median value of $295,420, a 22.8% increase compared to last year. Homes in Cedar Hills and Keller also increased from 20.3% and 22.8% — values are $463,500, $276,459, and $535,354 respectively. Additionally, Plano sees a consistent inflation in price due to increasing demand as more people choose this city for relocation, with its home value starting from $148 per square foot in 2019 and increasing the value to $177 per square foot in March 2021 — a 19.5% increase.
Dallas-Fort Worth-Arlington Metroplex
Dallas and Fort Worth are often viewed as a single entity because they are both an economic and cultural hub of Northern Texas and are home to 22 Fortune 500 companies — the fourth largest concentration of Fortune 500 companies in the country. These cities are known by the US Office of Management and Budget as the Dallas-Fort Worth Metroplex area, and officially designated together with Arlington.
According to Hedgefield Homes, homes in North Texas typically cost $80-$155 PSF for basic construction — without land and site work.
How Much Does It Cost to Build a House in Fort Worth, TX?
HomeAdvisor reported that the home values range from $148,241-$502,250 with a median price of $161 PSF — around $322,000 for a 2000 square-foot home. Costs in Fort Worth have seen a drastic increase in costs, with RedFin stating a 20.8% increase compared to the previous year. According to the Dallas Custom Home Building Blog, a surge of 30% affected the overall costs of residential construction, making it one of the biggest surges in the U.S. This surge ranked as the highest recorded surge in the past decade as well which affects potential homeowners from settling in the city. Despite this, the demand is still booming as homeowners now prefer new homes instead of existing homes that are priced too high. Home sales are now expected to increase more than 11% this year, thus continuing the upward trend.
Fort Worth’s basic home construction starts at $115.31 PSF — valued the same as Dallas and roughly costs $230,000 for a 2000 square-foot home. Other costs such as land can range from $7,000 per acre to around $50,000. In addition, permit fees have an increase of 27% of its price, ramping the percentage to a total of 30%. With all this in mind, Fort Worth and the rest of Texas is slowly recovering economically after the detrimental effects that the pandemic imposed on the cities. It is a matter of time until the city fully recovers and residential construction costs can stabilize.
The city has its fair share of upscale, mid-tiered, and inexpensive neighborhoods. The median value for some and its rate of increase/decrease compared to the previous year’s deals are as follows:
- Fairmount: $445,000, a 26.3% increase
- Arlington Heights: $362,000, a 15.7% increase
- Park Glen: $ 315,000, a 25% increase
- Summerfields: $265,000, a 26.2% increase
- WoodHaven: $179,900, an 18.2% decrease
How Much Does It Cost to Build a House in Arlington, TX?
According to real estate marketplace Realtor.com, homes in the city have an average value of $156 PSF — roughly $312,000 for a 2000 square-foot home. The site also noted that there is a 16.5% increase in the price tag annually. HomeAdvisor reports that the cost for building a house in Arlington ranges from $148,241-$502,250. For basic home construction, the price is the same as Dallas and Fort Worth and costs $115.31 PSF.
Major Custom Home Building Cost Trends Across the Web for Dallas
Figure 4. Comparison of single-family housing construction permits between major metro cities in Texas in 2021, according to the US Census Bureau and Texas Real Estate Research Center at Texas A&M University.
In today’s context, there are three trends that are most prevalent in Dallas. The first is problems in supply. Material sourcing has become an issue as the year progresses with numerous demands for specific materials for single-family homes. Along with this is the current increase of construction making matters more difficult for homeowners to decide on what the next best course of action is. A bright spot however is the increase of multifamily permitting activity over the last couple of months.
The second issue would be that rentals are not in high demand in Dallas. According to the MillionAcres, the data regarding rentals has seen an up and down trend with rentals either doing well or underperforming. Currently, Dallas is on a downward trend but still maintains an 8.4% demand which is above the national average. Given this data, it sits above the average but when talking about performance and trend of rentals, it is on a downward trend which may continue due to the world’s current state.
Lastly, the third issue lies in the constantly increasing prices of construction services. Millionacres states that homes in Dallas are 12% more expensive than last year while rentals are 3% more expensive. This data shows that these trends continue to go up, making it difficult for homeowners to find the best situation and location to build their homes. Overall, demands in Dallas present an “unhealthy” and “weakened” data due to the price and supplies.
What Leading Custom Home Builders and Architects that Serve the Dallas Area Say
We have discussed the various aspects and their estimated values that should be considered when building a custom home. To further help you have more insight regarding this, we reached out to some of the best custom home builders, general contractors, designers, and architects to gather more information about Dallas’s building cost and trends.
According to Greg Alford, owner of the luxury home building company Alford Homes, permitting is one of the complications in the industry today as applying for one can take up to six weeks and may last longer, up to two to three months. Aside from that, there are only a few lots available in the area, and the inventory can not keep up with the demands for new home constructions. This pushes the values to increase, and further increases the cost of purchasing a lot. Regarding the price of homes per square foot, the firm’s price range starts from around $369 up to $600 per living area square foot plus the lot and interim interests. Greg also shared a common trend that he sees with the client’s design. They now opt for reclaimed timber materials, engineered wood flooring, high gloss painted cabinets and ceilings, and sliding door units. Wine rooms, floating staircases, and outdoor living/cooking areas are also gaining popularity among homeowners.
Neil Bubel, President of Traver Construction, verified the permitting issue. He expressed that getting permits in the Dallas area takes a significant amount of time compared to the other cities that take only one to two weeks. He also verified that demand for construction is higher than in 2019. Current residents often want to update their homes’ kitchen and master bathrooms or add extra amenities to their property, such as outdoor structures. The remodeling costs rose up to 30% over the past two years as material and labor costs increased. The COVID-19 pandemic greatly affected the purchasing of construction materials, especially lumber, and pushed the prices to go higher. Neil shared another reason for the price surge with us — the lack of skilled trades, wherein labor fees have inflated and haven’t decreased yet. On the other hand, design fees remained relatively stable; however, lead time is getting longer. Neil suggested that it is essential to hire the right company to plan, manage, and design details of your home project. Materials should be ordered with more than enough lead time to avoid any construction delays.
Further confirming what Greg and Neil said, Tom London of Thomas Signature Homes expressed his frustration toward permitting issues. The principal said that what only takes around three hours to get before takes approximately three to four months today. Besides the 30%-50% price hike in material costs, supply chain disruption is also one of the leading issues in the city. Ordering construction materials such as lumber, windows, appliances, and wood floors now take up to four to six weeks before it arrives; it may also take up to 12 weeks. Tom also advised future homeowners that they should be ready to pay more than what they originally planned and be prepared for construction delays — at least six months longer than planned. “If you don’t have to build a new house right now, don’t. Even if you are willing to accept paying higher prices for materials (blank check), you will be totally frustrated with the amount of time to complete the project,” Tom added.
Founding principal Michael Malone, FAIA of Malone Maxwell Dennehy Architects, an award-winning full-service architectural firm, gave a somewhat higher value regarding the price of high-end custom homes. He said that if clients want the same home quality and character as what is shown on their website, it generally costs $450-$600 PSF. However, these are not the absolute values and are only estimations as the firm does not use the PSF pricing method for its services. Michael expressed that this technique does not take into account all of the variables that come with building a home and only considers what people actually see. Regarding the trends, he also expressed his insights about the upward pressure concerning labor and materials shortage in the national market. This issue is also being intensified by the influx of people coming into the region.
According to Saad Chehabi of S&R Development, the average square footage cost of construction varies on numerous factors such as roofing, materials, lighting, etc. Value-conscious homes can range around $240-$280 but the price can go lower at the cost of the quality of materials. Builders will resort to using lower quality materials to fit the desired budget, leading to a less solid and refined structure. Mid-range homes on the other hand can cost anywhere between $300-$380 because of the quality materials, finishes, and the foundation the builders provide. Lastly, for luxury residences, prices vary from $400-$600 for the additional premium features and finishes. This involves the use of refined materials such as marble, stone, European exterior steel, and many more. As for the overall price, there has been minimal increase in price in the past 15 years. However, in the last two years, costs have increased in nearly every aspect of construction, reaching a double digit percentage increase because of labor and material shortages.
What is the future of residential construction in Dallas?
Like with any other country in the world, Covid-19 has ravaged the economy of the U.S. Dallas being a primary hub for Texas has seen an increase in construction prices like any other city. From material sourcing, designing, building, and permits, prices continue to see an upward trend that plays a significant role in the type of house homeowners are looking for. According to Zillow, residences in Dallas have seen an increase of 17.4% over the past year and have the possibility of surging more due to the ongoing pandemic. The Texas Real Estate Research Center reported that this increase is still ongoing and home prices are projected to rise roughly 14% in the Dallas-Fort Worth area this year. Porch further verifies this by predicting a consistent increase up to 21.1% next year from the current median home price of $297,044. Lastly, according to the
Dallas Builders Association, the city of Dallas enacted Senate Bill 968 which prohibits or shut down residential constructions because of the ongoing pandemic. Whether it is a cost-efficient home or a luxury residence, it is important to be aware of these trends and data as these will play a large role in the decision-making throughout the process of building a home.
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