Why Everyone Is Leaving The Best Dallas Suburbs

Can we just talk about the elephant in the room? Dallas property taxes, PIDs, and MUDs are making people leave some of our best suburbs. We recently had a client who said, we do not want to spend our monthly budget on MUDs, PIDs, and high taxes. And you know what? Challenge accepted. Their location was flexible, so one of my agents and I scoured the entire looking for combinations of no PID, no MUD, low HOAs, and low property taxes. And we found it. We found plenty of choices. Enough that it took five days of marathon showings in one week. But I want you to think about that for a minute. We were eliminating entire suburbs that they wouldn't even consider because of how high the taxes and the PIDs and the MUDs were. They ended up finding a gorgeous new construction home within their budget where they're just paying for the house. None of this MUD, PID, and high tax nonsense. But you know what? Compared to how many houses we filtered through, those were in the minority. And that's our problem in Dallas. We recently received our tax assessment notices for the year, and the appraisal district raised the values on both our home, our daughter and son-in-law's homes, and every single one of our rentals. So when I look at median sales prices, I see prices are down 4% year over year. The market has softened. Buyers know it. Sellers are feeling it. And yet the appraisal district, yeah, they're not backing down. They are after their pound of flesh regardless of what the market is doing. So I want you to sit with that for a second. The value of the Metroplex as a whole, according to the people who actually buy and sell homes, has gone down. And the entity that determines what you owe in taxes decided to go in the opposite direction. That is the financial environment Dallas homeowners are navigating right now. They're leaving because the math stopped working. And once you understand what broke the math, including property taxes, you'll be able to see which communities carry the most risk going forward. Here's the thing. In 2021, you would see a home hit the MLS in the morning. Your agent would alert you. You drop everything, go look at it over your lunch hour, and by the time you got back to your desk, you would already have a text that said multiple offers received, highest and best by five o'clock. Five o'clock the same day. So you had maybe four hours to decide whether to make one of the largest financial commitments of your life. And if you didn't move fast enough, you would lose the home. Then you would start over and do the same thing the following weekend. In that environment, there was no time to research property tax rates, no time to dig into whether a community had a mud layered on top of the base tax rate, no time to understand what a PID actually costs you every month or what you're supposed to be getting in return for that expense. Your agent wrote the offer. You hoped you won. You closed. And then you dealt with all those details later. That was the 2021 buyer. And a lot of those buyers are now living with decisions that only made sense during a low rate remote work era that just no longer exists. Fast forward to today. And I have a family right now searching in the Frisco and Prosper area. We structured their search, set it all up six weeks ago. They've been out every weekend. You know, they're looking carefully, comparing carefully and asking every question that 2021 buyers never had time to ask. And you know what? Many of the homes we started looking at six weeks ago are still sitting on the market. Buyers have time now. And when buyers have time, they do math. And when they do the math on certain suburbs in this market, layering in taxes, MUDs, PIDs, HOAs, commute costs, and mortgage rates that are more than double what they were three years ago, some of those suburbs do not survive the calculation. So you end up with sellers leaving and buyers not wanting to replace them. So think of it this way. Again, people don't leave suburbs. They leave bad math. When rates were at 3%, a MUD at $0.50 per $100 of assessed value was a line item. I mean, it was real money, but it wasn't like a deal breaker. You could absorb it. Same with a PID. Same with an HOA that was running $300 a month. Your low mortgage rate made all of those costs manageable. At 6.5%, none of that is true anymore. Every additional cost layer cuts directly into buying power. And the problem in many Dallas suburbs is that the cost layers haven't gone away. They've gotten worse. Buyers right now are value sensitive in a way we haven't seen in years. And when they look at certain communities and compare what they're paying in MUD and PID costs against what they're actually getting, a lot of them are walking away. Now let's add another layer that doesn't get talked about enough. What happens to a neighborhood when builders can't sell their homes? Because what we're seeing here is causing people to leave these suburbs as well. In 2021 and 2022, builders couldn't build fast enough. Buyer demand was so intense that when a new phase opened in a master plan community, people were camping out to get a lot. Those buyers were owner-occupants. Then rates went up. Demand cooled. Builders who had product in the pipeline, they needed to find buyers. And when the traditional owner-occupant buyer pool dried up, builders started doing something that has had lasting consequences for those neighborhoods. They started welcoming in investors. Investors are not interested in putting down roots. They are interested in yield. They buy the home, they rent it out, and they treat it as an asset in a portfolio. Now you have neighborhoods where a higher percentage of homes are rentals. People move more often. There's less continuity. The feel of the neighborhood shifts, and buyers pick up on that. Even if they can't articulate it perfectly, they feel it. And when they feel instability, they discount value and they leave. Now layer in something else that's quietly putting pressure on these areas. New construction. New construction is not just competing with resale. It's actually hurting it. Builders have tools that resale sellers do not have. They can offer rate buydowns. They can offer closing cost incentives. They can adjust pricing strategically across multiple homes. We call this a builder competition kill zone. And you know what? Buyers are figuring it out. Now more than ever before, I have buyers telling me they will not buy anywhere near ongoing new construction. They leave the area and they do not look back because they're smart enough to know selling there will be brutal. Now take those same construction dense areas and add rapid population growth. This is where places like Forney and the entire 380 corridor come into play. These communities were attractive at first because they felt quiet. They felt like you were getting space, new construction, and a lower entry price. But then builders accelerated. Inventory exploded. The population increased rapidly and the infrastructure did not keep up. If you've driven through Forney in the last two or three years, you've seen what happens when a suburb grows faster than its roads can handle. Forney exploded in population because the land was cheap, the housing was affordable, and it felt like a reasonable distance from the employment centers to the west. And then people moved there en masse, all of them heading in the same direction in the morning and the same direction in the evening. And then the road network that was built for a much smaller community could not absorb it. The same story is playing out along the entire 380 corridor to the north. From Prosper, out towards Salina, towards Aubrey, towards the communities that were supposed to represent the next wave of accessible suburban living. The 380 corridor was never designed for the traffic volume it's handling now. And the infrastructure improvements that would relieve that pressure are generally like a few years away. Now, layer on top of that, the return to office reality. Fairplay Talks wrote an article titled How 3 in 10 Companies Plan to End Remote Work and Enforce Return to Office by 2026. They reported that by 2026, 30% of companies will require employees to be in the office five days a week. For someone who bought in one of the far northern excerpts during the remote work era, when the commute was optional, I mean, that calculus has changed completely. I mean, think about what a five-day commute from Salina or Prosper into a Dallas or Plano corporate hub actually costs, right? Not just in gas, but how about in tolls, in time, in wear on your vehicle, in the quality of your morning and your evening every single day. Tollway exposure is a serious financial factor that I don't think buyers in 2021 priced properly because many of them weren't commuting. When your only access to work runs through a toll road, right, that is a fixed monthly cost that has to be added to every other line item on your budget. And for buyers who are already stretched by a 6% mortgage, elevated taxes, a MUD, a PID, a rising HOA, and now a five-day commute, that's a budget that doesn't work. The suburbs people are leaving are the ones burdening homeowners the most, where owners are stretched by multiple layers of costs and no longer have the remote work option that once made the distance feel manageable. Now, the good news is you can identify a suburb people will be leaving before they leave it, right? That's called being a smart buyer, and you want to take the time to think this through. The question is not just whether you can afford to buy there. The question is whether the value equation holds up over time. The first thing you want to be on the lookout for is the payment trap suburb. Understand the total monthly cost, not just the mortgage payment. That means the base property tax rate for that specific address, not the county average, okay? The specific address. It means any MUD tax rate on top of that, any PID assessment, the HOA dues at their current rate. So when you add all of those together and put them on top of a current market interest rate, that's your real monthly cost of ownership. Compare that number to what you would pay in a community without those additional layers, and then ask yourself honestly what you're getting for the difference. If a future buyer is going to be asking that question, you need to be asking it too. The second thing is builder competition kill zones. I mean, get specific here. How many lots does the builder still have to develop in that community? How many competing communities are within a 10-minute drive? When you're ready to sell in five or seven years, who are you selling against? If the answer is a national builder who can offer rate buy-downs and design center credits, you need to price that disadvantage into your decision today. The third thing is the owner occupancy ratio. What percentage of homes in the community are investor-owned rentals? Is that percentage trending up or down? A neighborhood that is trending toward higher renter concentration is a neighborhood where long-term stability is less certain. You are not just buying a house, okay? You're buying into a community, and the composition of that community will affect your quality of life and your resale value. The fourth thing is infrastructure trajectory. Okay, not infrastructure today. Infrastructure trajectory. Is the road capacity adequate for the population that's already there, or is it already strained? Are there funded, approved improvements in the pipeline, or is everything still in the planning phase? Is the employment base accessible without toll roads, or is the community entirely tollway-dependent? And the fifth thing, and this is the one that ties everything together, is the value equation relative to your alternatives. Because this is ultimately what drives people out of suburbs. It's not that the suburb became terrible. It's that a better option became visible. When a buyer with affordability pressure is choosing between a community with high taxes, a mud, a pid, and a congested commute, and a community with lower carrying costs, a shorter drive to work, and resale comparables that are holding stronger, they are going to choose the better map every time. All of these Dallas suburbs where everyone's leaving, these people are making a correction. They're correcting decisions that only made sense in a world that no longer exists. And they're choosing value in a market where value really matters. This is what's happening in Dallas right now. And if you're buying, the single most protective thing you can do is run this analysis before you fall in love with a community. Okay, not after. Because once you're emotionally committed to a house, it really starts to get very hard to see the math clearly. I know me, my agents, we personally run this analysis as a standard part of the buying process. Okay, not optional. We do not lead buyers into making a six or seven figure decision without understanding the full cost structure of the community they're buying into and the resale risk profile they're taking on. And that is what we mean when we say our job is to protect your equity, not just help you find a house you love. If you're trying to figure out whether a specific suburb makes sense for you right now, the most important question you can ask is, does the value equation hold up when you stress test it? Now, if the suburb does, but the house doesn't, you have a whole different problem on your hands that's just as important. No matter how great the suburb is, there are some homes you need to not buy no matter what. In fact, I gave you a good breakdown of that in this video, which you might want to check out next. In the meantime, this is Wendy Pinnell, your Dallas realtor and broker, and I'll see you there.