Why Is the Cost of Living in Dallas So Expensive?

Dallas, a prominent metropolitan area in Texas, has experienced significant expansion, leading to a noticeable increase in the cost of living. This article explores the key factors contributing to Dallas’s rising expenses, including its housing market, robust economic development, and the impact of everyday costs and taxes.

Housing Market Dynamics

The Dallas housing market is a primary driver of the city’s increasing cost of living, characterized by a complex interplay of supply and demand. Rapid population growth has fueled a substantial demand for housing, consistently outpacing the available supply. This imbalance has led to rising property values across the metropolitan area.

The inventory of available homes has struggled to keep pace with the continuous influx of new residents. While recent data indicates an increase in housing supply and a slight decrease in median prices, the market remains competitive. In July 2025, the median close price for homes in the DFW metroplex was $415,000, similar to the previous year, with five months of inventory. Active listings in the Dallas-Fort Worth area jumped by 37.20% from 25,915 to 35,555 between July 2024 and July 2025, providing buyers with more options.

Homes are staying on the market longer, with the median days on market at 36 days in July 2025. This extended time suggests a softening, offering buyers slightly more negotiating power. The median home price in Dallas has seen a steady increase, reaching around $350,000 as of August 2024, with significant variations by neighborhood. The average home value in Dallas was $315,056 as of May 2025, reflecting a 4.6% decrease over the past year.

Ongoing demand from a growing population continues to exert upward pressure on prices despite these recent shifts. New construction aims to alleviate some pressure, with an estimated 46,500 homes expected to be started by builders in 2025. This level of construction may still fall short of fully addressing the long-term housing needs of a rapidly expanding population. The dynamic market conditions underscore the challenge of finding affordable housing options.

Economic Growth and Population Influx

Dallas’s robust economic landscape serves as a significant magnet, attracting a continuous stream of new residents. The metropolitan area boasts a strong job market with diverse opportunities across various sectors. Employment in the Dallas-Fort Worth area expanded by 20.3% over the past five years, including a 4.2% increase in the last year alone, with notable job creation in professional and business services, technology, healthcare, retail, wholesale trade, and hospitality.

This economic vitality is bolstered by the influx of major corporations relocating or expanding their presence. Dallas-Fort Worth was the top metro for corporate headquarters relocations from 2018 to 2024, attracting 100 new corporate headquarters. This trend is partly driven by Texas’s business-friendly environment, which includes the absence of a state corporate income tax and various business incentives.

The robust job growth and corporate relocations create a powerful draw for individuals seeking employment and career advancement, leading to sustained population growth. The Dallas-Fort Worth region added 170,396 new residents between 2021 and 2022, making it one of the fastest-growing metropolitan areas. This continuous population influx, driven by economic opportunity, directly translates into increased demand for housing, goods, and services across the city.

Cost of Everyday Expenses and Taxes

Beyond housing, the cost of everyday goods and services significantly contributes to the overall expense of living in Dallas. While the overall cost of living in Dallas is marginally above the national average, certain categories are notably higher. Healthcare costs in Dallas are approximately 12% higher than the national average, and utilities are about 10% higher. Groceries in Dallas are also pricier, with residents spending an average of $282.21 per week.

Utility expenses tend to be high, with the average monthly energy bill hovering around $200, largely due to high air conditioning usage during hot Texas summers. Basic services like electricity, water, heating, and garbage average around $232.44 per month. Internet service adds another $72.61 per month, and mobile phone plans average about $69.09 monthly.

Texas does not levy a state individual income tax, which benefits residents compared to states with high income taxes. Local levies, primarily property taxes and sales tax, play a significant role in the overall cost burden. Property taxes in Texas are among the highest nationally, with an average effective property tax rate of 1.63% on owner-occupied housing value, compared to the national average of 0.90%. In Dallas, city and county property tax rates combine with those from school districts and other special taxing units, leading to an average effective rate of 2.22% for homeowners, resulting in an approximate annual payment of $4,306.

Sales tax also impacts residents’ budgets. The state of Texas imposes a 6.25% sales and use tax, and local jurisdictions can add up to an additional 2%, resulting in a combined maximum sales tax rate of 8.25%. This tax applies to most retail sales of goods and taxable services, though food is generally exempt.