Fort Worth ascendant: Economic indicators show city separating from Dallas
June 2,2018
Fort Worth Business Press article by Maurice Richter
Largest population gains between 2016 and 2017
1. San Antonio- 24,200
2. Phoenix - 24,000
3. Dallas - 18,900
4. Fort Worth - 18,700
5. Los Angeles - 18,600
Source: U.S. Census
Despite its many attributes such as a vibrant downtown, world-class museums and the iconic Western heritage Stockyards, Fort Worth has long lived in the shadow of its larger counterpart to east.
But new economic indicators suggest that is changing and Fort Worth’s star power is rising.
“In 2017, as we saw a comeback both in our manufacturing and in our energy sectors, we saw job growth ramp up in Fort Worth,” said Laila Assanie, senior business economist for the Dallas Federal Reserve. “And for 2017, job growth in Fort Worth was faster than the rate of increase – or job growth – that we saw in Dallas.”
Fort Worth business leaders were disappointed in recent years as Toyota and other major corporations chose to relocate headquarter operations to Texas and chose the outskirts of Dallas rather their city. And while Fort Worth is still technically in the race for the Amazon HQ2 economic development prize, the city if rarely mentioned as a top contender.
Those cold, hard economic facts spurred Fort Worth economic development officials into action. The city’s first economic development plan unveiled earlier this year to address “challenges (that) put Fort Worth in an increasingly weak position toward the city of Dallas and aggressive suburbs throughout the metro area.”
“The city’s growth in recent years has largely been defined by expansion of single-family residential development driven by employment growth in other cities,” according to the city report.
While Fort Worth leaders are working to draw corporate relocations to their city, the booming manufacturing and energy industries will continue to flourish with new jobs and the city’s affordability will attract more residents and businesses to the western side of the DFW area, the Fed’s Assanie said.
Going back to the recession, Fort Worth and Dallas have alternately fared better, Assanie said.
“Because of Fort Worth’s less dependence on business and financial services, (the city) was able to rebound much faster than Dallas,” she said.
However, the Fort Worth area’s economy slid with the energy bust in 2015, while there was little impact on the Dallas area.
“We saw job growth in Fort Worth slow substantially in 2015 and 2016,” she said. “And then it bounced back in 2017 and it’s growing pretty robustly so far this year.”
Employment growth in the Fort Worth area was 2.5 percent compared to 2.3 percent in the Dallas area in 2017. By comparison, employment growth in 2016 was 3.7 percent in Dallas and 1.4 percent in Fort Worth, according to the Bureau of Labor Statistics.
While corporate relocations have been a boon to the economy of the Dallas area, and especially Collin County, the flip side has been the erosion in affordability.
The Wells Fargo affordability index ranks 237 metro areas across the U.S. based on a formula that combines median sales price and median income. In the first quarter of this year, slightly less than 50 percent of the homes that sold were affordable to families of median income in Dallas.
Fort Worth’s affordability rank means that 63 percent of the homes sold in the first quarter were affordable to median income families.
“Among major metro areas in Texas, Dallas is the least affordable metro area in Texas,” she said.
The median home sales price in Fort Worth in April 2018 was $230,872 compared to $281,187 in Dallas, according to Federal Reserve data. Dallas’ media price was about $20,000 above the median U.S. sales price of $259,164.
“(Dallas) was never a very high-priced market,” Assanie said. The area “used to always be below the U.S. median home price until mid-2014 when it crossed over and hasn’t returned since.”
While prices have long been less expensive in Fort Worth than Dallas, the gap has continued to widen since 2012, Assanie said.
Home prices have spiked statewide in the past several years due to several factors, particularly an imbalance between supply and demand. Bidding wars and buyers paying above asking price have become commonplace throughout the Dallas-Fort Worth, Austin and other metro markets.
Abundant, low-cost land is the factor that made Texas so attractive to newcomers.
It’s now contributing to the higher cost of high-end homes.
Among the major metro areas, the land cost is the highest percent of the cost of a home in Dallas at 29.4 percent, followed by Houston at 25.1 percent, Fort Worth at 22.4 percent and San Antonio at 15.2 percent, according to data from the Real Estate Center at Texas A&M University.
“Texas’ more affordable home prices have played a key role in the state’s economic growth,” said Jim Gaines, chief economist for the Real Estate Center at Texas A&M University. “They attract more people and businesses from other states and result in more demand for goods and services, higher economic growth rates and more jobs. These combine to attract even more people.”
As land has become more expensive in Dallas, cost of living rises. New homes are being built further out, which increases commute times and traffic congestion as well, experts say.
“We’ve seen builders move out into Fort Worth and find a more affordable price,” Assanie said. “I think that trend will likely continue going forward.”
New home permits rose 26 percent in the Fort Worth area in 2017 but only 11 percent in Dallas.
If the trend continues and Fort Worth’s home prices remain affordable, the area will see higher economic growth, more jobs and more population growth, economists predict.
“The overall perspective for Fort Worth is actually pretty bright, given all the factors working in its favor going forward,” Assanie said. “The rebound in manufacturing and energy, the housing affordability being much better in Fort Worth versus Dallas – all those factors should spur growth going forward.”
Those trends show in recent U.S. Census figures. Fort Worth zipped past Indianapolis to become the 15th largest city in the United States, according to data from the U.S. Census bureau. Fort Worth made the leap by adding 18,700 new residents, boosting the city’s population to 874,168.
Dallas’ population gain, in contrast was 18,900 – only 200 more than Fort Worth’s.
Fort Worth’s population gain isn’t that surprising given that three Texas cities were among the top five large municipalizes in the nation to record the highest population gains between July 1, 2016 and July 1, 2017.
San Antonio tops the list with a population increase of 24,200 people followed by Dallas in the No. 3 spot and Fort Worth coming in fourth.
Frisco registered the highest growth rate in the nation at 8.2 percent among cities with a population of 50,000 and above. Frisco’s growth rate was more than 11 times the national growth rate of 0.7 percent.
Texas leaders have long pointed to population growth as proof of the state’s ability to attract new businesses and jobs through business-friendly regulatory and tax policies, abundant, affordable land and economic incentives