Why do single-family occupied homes matter and need to be protected? Homeowners are the heart and soul of the city. When homeowners start leaving a neighborhood, the neighborhood declines. When homeowners have confidence in the future of a neighborhood, they buy a home in that neighborhood or reinvest in the home they already own in a neighborhood. Short-term rentals (STRs) do not attract homeowners; STRs repel homeowners.
Opponents to Homeownership Promote Density
Opponents of homeownership propose density in many forms and fashion – ADUs (additional dwelling units); changing the definition of single-family zoning to allow up to four units on every single-family zoned lot, as in Portland; abolishing single-family zoning, as in Minneapolis; or possibly allowing STRs (short-term rentals) in single-family neighborhoods as Dallas is considering. Every one of these density directions undermine single-family homeownership and the health of the neighborhood. In each case, whether it is an additional dwelling unit on a home site or a single-family home turned into a short-term rental; the neighborhood becomes less attractive. Long-term homeowners are replaced by transient tenants and absentee investors.
I Have Never Heard a Buyer Say that They Were Looking for a Home Next to Short-Term Rental
In my many years as a real estate broker, I have never heard a homebuyer or renter say they were looking for a home or an apartment next to short-term rentals or for that matter even a long-term rental. I have heard homebuyers and renters say they would like to buy or rent a home next to another single-family home or a lake or a pond or a trail, but I have never heard someone ask to live next to short-term rentals or an apartment unit. If transient renters don’t mind staying next to another short-term rental, then designate areas for short-term rentals – that’s called zoning. And zoned areas for short-term rentals is what Dallas needs.
Political and Media Support for Short-Term Rentals is Misguided and Short Sighted
There has been political and media support for short-term rentals as a way for families to make a little extra income or to increase Dallas tax revenue. In the shortest possible terms and ideal conditions, maybe they are correct, but what about the people that STRs hurt? What happens to the tax base when homeowners start moving out and homes decline in value? Owners of houses converted into short-term rentals are profiting on the backs of single-family homeowners. The homeowners are the ones paying for neighborhood police patrols, participating in crime watches, organizing home tours, and creating a collegial atmosphere of friendly neighbors. Short-term rentals used for parties or a few days’ stay does not foster community or safety. Absentee owners seldom tend their front gardens or care for their property like homeowners do. Why should homeowners put in a long-term effort that enables short-term rental owners to benefit with short-term profits?
Taxes on Residential Neighborhood Short-Term Rentals (STRs) Do Not Cover Their Cost to the City
Besides depressing home values and the tax base, short-term rentals (STRs) require additional inspections, administrators, court personnel, police, and the time of neighboring homeowners having to monitor them and report the violations. Dallas has a shortage of police; hiring police is difficult. Sending police to short-term rentals delays response time to the rest of the city. STRs in Dallas neighborhoods do damage not just to the adjoining homes and neighborhoods but curtail the desirability of the entire city.
We saw Short-Term Rentals Destroy the Finest Neighborhood in Dallas
In 1907, Munger Place, only 2.5 miles from downtown, was the most prestigious and highest priced neighborhood in Dallas. Short-term rentals changed everything. A Munger Place home on Junius Street in 1907 sold for $10,500. By the 1930s, rooms began to be rented out to schoolteachers. Then, during a housing shortage, houses were divided up into four apartments. Homeownership declined, and absentee owners started buying up homes to rent as apartments on a week-to-week basis. Then the City of Dallas zoned the neighborhood MF2 (two-story apartments). The decline accelerated even when the new added density was fashionable apartment complexes. Density and transience undermine a single-family home’s appeal. The home that sold for $10,500 in 1907, after suffering the short-term rentals and apartment zoning, lost 30% of its value over a 70-year period. In 1977, this same home that originally sold for $10,500 now sold for only $7,500. And this home price drop occurred in a 70-year period when Dallas was booming.
Regulation Cannot Regulate Short-Term Rentals in Residential Neighborhoods
Proponents of short-term rentals say that STRs are not bad – they just need to be regulated. Zoning is the logical and time-honored way to regulate them. Proponents say that the city just needs to regulate the STRs in residential neighborhoods to get rid of the bad ones. Sounds good, but enforcement would never happen and the cost would be astronomical to the city while it tried. Zoning is the tool to regulate and keep STRs out of residential neighborhoods.
Some Suggest Owner-Occupied Homes Should be Allowed to Have a Short-Term Rental
An owner-occupied short-term rental does sound more benign than the majority of STRs owned by absentee property owners, but usually it is not. First, it is almost impossible to prove a home is owner occupied. And even if the STR is owner occupied, it can be just as fraught with problems and sometimes even greater problems. When I first moved into Munger Place and its zoning allowed rooming houses, there were two owner-occupied rooming houses and short-term rentals on the block. Most of the other absentee owned homes on the block had been turned into four apartments that were rented. The owner occupied short-term rental owners rented a greater number of renters at one time. One homeowner rented out nine small apartments in his house. Within 18 months, both of these owners were killed in their homes by one of their short-term tenants. The first one was killed by a gunshot, the second owner was originally thought to be killed by a shotgun until further investigation determined it was actually a murder by means of an icepick – the Old East Dallas weapon of choice. Most STRs will have better clientele than these, until the neighborhood starts to decline. Regardless, transient renters with little oversight makes for potential trouble.
Beer and Wine Licensed Bars in East Dallas Proved Regulation Cannot Regulate a Bad Use in a Residential Neighborhood
In the 1970s, beer and wine bar licenses were issued by the City of Dallas for $50.00 a license. Old East Dallas ended up with 5% of the population and 25% of the beer and wine licensed bars. Now one might ask what is the problem with a tavern/honkytonk/bar that has a $50 municipal license to sell beer and wine? If the bar was a problem, why wouldn’t the city just shut it down? Bob Logan, an East Dallas property owner, and surrounding homeowners, diligently tried to shut down these bad bars. They would go to the Municipal Court with a string of offenses that occurred at a specific bar – murder, prostitution, gambling, solicitation of minors – and usually the court would not take action. However, if the court did revoke the license of the bar, the owner of the building would open up the next day by putting the bar license in the name of the next person sitting at a bar stool in their bar. The bars were allowed under the zoning and the owners would never get shut down, just the transient license holders. The same would happen with STRs if they were shut down and names of license holders or LLCs holding licenses would change. Bob Logan realized that these licenses were turning over on an average of every 90 days. As a result, the solution was to deny any new beer licenses in this area and let attrition take its course. With the support of Mayor Folsom, the East Dallas Bar Ordinance was passed which prohibited any new beer bar licenses. Even at the location of an existing beer bar, a new license could not be issued in a new person’s name. In about 18 months, 95% of the beer bars closed. At the same time, the 100-block area zoned multifamily was rezoned to single-family, where no new apartments could be created. Now a neighborhood with no new apartments and no new bars created a positive trend where lenders for the first time in decades made loans, and homeowners for the first time were able to get conventional loans and restore a home back to single-family. Over the last 40 years there has been one billion dollars’ worth of renovation and new single-family homes built in the 100-block area rezoned single-family and the area where new beer and wine licenses were prohibited.
Prior city regulation and code enforcement could not stop absentee owners from letting their buildings deteriorate or allowing neighborhood bars contribute to crime. Only zoning that prohibited new apartments and new beer licenses in the neighborhood was effective. Once new apartments and new beer and wine licensed bars were prohibited, Old East Dallas began its 40-year comeback.
Some Say that Short-Term Rentals are Modern and Hip and will Attract Visitors
Short-term rentals perpetuate the urban neighborhood cliché of crime, noise, and transients. Those that think STRs will make Dallas modern and hip don’t know modern and hip. San Francisco is “modern and hip” with syringes littering the streets. Visitors still come to San Francisco while homeowners are fleeing the city for the safe, stable neighborhoods of Dallas. Los Angeles, San Francisco, Portland and Seattle enjoy modern and hip transient visitors and renters. Continue to make Dallas the city where homeowners want to come and live. What is actually more modern and hip than a single family home urban neighborhood where people actually enjoy living?
A Shut-Down Short-Term Rental Could Immediately Reopen Under a New Name
In the unlikely event an STR is shut down, it could immediately reopen at the same location under a new STR license holder, just like what happened with the beer bar license holder. Or the property owner that has short-term rentals could in two days change the name of any of the properties to a new LLC. This “new” entity could operate a short-term rental at the same property where the last STR was shut down.
Proponents of STRs are Wanting to Reverse 40 years of Neighborhood Success.
There might be a place for short-term rentals and new apartments, but not in neighborhoods with single-family homes. The city of Dallas boomed for 70 years and simultaneously the value of Munger Place and Old East Dallas cratered because of transient renters. Now, the North Texas region is booming, but over the last two years Dallas has lost population and witnessed a decrease in the percentage rate of homeownership. Any City Councilperson who votes for STRs in a residential neighborhood is voting against every one of the 500,000 homeowners in Dallas who enjoy their homes as a home.
Allow Dallas to Flourish with Single Family Homes
If the priority and goal of Dallas is for the city to thrive, it needs to protect the inventory of single-family homes and the single-family zoned neighborhoods. The solution is simple: Designate short-term rentals for what they are – commercial lodging – and encourage STR success outside of residential neighborhoods. Keep single-family homes single-family. Allow our residential neighborhoods to continue to flourish, attracting people from across the country to become part of Dallas.