Why has cost of living in Dallas-Fort Worth increased? Economists talk inflation, demand
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North Texans have seen prices rise this year, from groceries and gas at the pumps to rent and home prices.
Between August 2020 and May 2022, the median home price in Fort Worth jumped 48% from $248,000 to $367,000, the Star-Telegram previously reported. The median home price price later dropped almost 5% to $350,000.
The Dallas-Fort Worth area was ranked the least affordable place to live in Texas, according to a review of the Cost of Living Index by EverythingLubbock.com.
One Star-Telegram reader wanted to know what gives.
Q: “What has changed in the cost of living over the past two years? How much has it changed and why?”
What is “cost of living”?
Cost of living is determined by the Consumer Price Index which collects prices of the average bundle of goods consumers spend money on each month, said Bill Crowder, economist at The University of Texas at Arlington. Housing, energy and food are the three primary drivers that determine an area’s cost of living, he said.
What makes an area’s cost of living increase?
While low cost of living makes an area attractive for people to move to, it can also cause an increase in cost of living.
Crowder said it all comes down to supply and demand. As more people move to Texas, the more the demand for resources like housing increases.
“Whenever the demand for a good increases faster than the supply of it can increase, that’s when you’re going to get price increases,” Crowder said. “If you can get the opposite, if you can get the supply increasing faster than the demand, then you’ll actually get price decreases.”
Michael Carroll, economist at The University of North Texas, said increased consumer spending and supply issues following the COVID-19 pandemic have contributed to the global inflation and rise in cost of living.
Gas prices in particular have been a driving force in determining the inflation rate, Carroll said.
Americans saw record breaking gas prices over the summer, with the average gallon price in the United States reaching an all-time high of $5.02.
Why is cost of living in North Texas going up?
In the last few decades, there has been a pattern of people moving to Texas from states with higher costs of living.
One example that makes Texas an attractive economic option for both businesses and people is that it doesn’t have a state income tax, Crowder said.
The Kinder Institute for Urban Research at Rice University reported that the net migration from California to Texas in 2018 and 2019 was between 45,000 and 50,000 people per year. The driving force? Home prices.
While people have migrated into Texas for a lower cost of living, the growing population has made cost of living go up for Texans.
“It’s kind of a self-fulfilling kind of thing where, as the economy gets stronger, people sort of recognize, ‘Oh there’s a strong economy in Texas’ and so they come and that only makes the economy stronger,” Crowder said. “The strong economy kind of feeds on itself in the sense that it attracts more people, and as it attracts more people it makes that economy stronger.”
How much has cost of living gone up?
Since 1983, the consumer price index for Dallas, Fort Worth and Arlington has had a steady increase, according to data compiled by the Federal Reserve Economic Data.
The consumer price index starts at 100 for the base average cost. From 1983, which had a consumer price index of 100, the Dallas, Fort Worth and Arlington areas recorded an average consumer price index of around 278 as of September.
That number increased from 240 in September 2020, according to the Federal Reserve Economic Data.
Is there a way to keep cost of living down?
There isn’t much that can be done locally to contain the cost of living in an area, Carroll said. Local jurisdictions don’t have the tools to combat inflation.
Wage and price controls have been done before, but at the federal level, Carroll said. The United States hasn’t used wage and price controls since the 1970s, and inflation is nowhere near the same rate as it was then, he said.
