Everyone knows that a single-family home loses value if an STR (short-term rental) opens up next door. Homebuyers will pass over the STR-compromised home for other comparable homes desired by homeowners. And another thing happens. Dallas is losing population and, even more important, losing homeowners. An STR opening on a block might be so disturbing that the owners next door to, across the street from and behind the STR decide they have had enough and join those who decide to move out of Dallas. Beyond every STR directly affecting the homeowner-occupied single-family homes adjacent to it on four sides, an STR taints the entire block. There are degrees of annoyance the STRs cause. The STR impact ranges from sheer horror to low-impact inconvenience.
National Business Owner Jon Jaimes Describes Horror of STR Next Door
Jon Jaimes, a national business owner and Dallas homeowner, described to the Dallas Zoning Ordinance Advisory Committee (ZOAC) members the horror of living next to an STR. He addressed them and told them that they probably thought of STRs with 50 loud guests. He said that it was far worse. He asked them to imagine the eerie silence of 50 guests inside an STR and two armed bouncers at the front door. He also brought to their attention that on another late night there was a steady stream of children, from five-years-old to young teenagers, walking between his home and the out-of-town investor-owned STR. Whether the ongoing activities are illegal or legal, they are not becoming to the neighborhood.
“My Children Should Be Able to Grow Up Next to Neighbors Not Customers” – Jon Jaimes
Jon Jaimes stated that it was a reasonable expectation that his children grow up next to neighbors, not customers. Maybe just once a week or once a month another STR has a disruptive renter or party event. When this happens, there is still no one to hold accountable. The STR owner knows that regardless of the bad behavior on one night, those renters will just move on. Bad actors can take their traveling parties or illegal activities to a series of STRs so that no single STR address can be targeted by the police.
A Neighborhood is Friendly Relations with Neighbors
A neighborhood is defined by the friendly relations of neighbors. A revolving door of tenants or renters does not provide the stable nature of a true neighborhood. Neighborhoods are safe when neighbors know each other and look out for each other with their eyes on the street and their neighbor’s home. In a good neighborhood, the slightest interruption in the pattern of life on the street puts everyone on high alert. The constant hum and disruption of STRs dulls the early recognition of suspicious activity.
STR Mantra – The Bigger the House, the Bigger the Party
Some homeowners with homes on estate lots in Preston Hollow have not taken early interest in this issue because they think that their home and lot are large enough that it would be buffeted if an STR opened up next door. But, as the STR mantra goes, the larger the house, the larger the party. When a home in Preston Hollow becomes a permanent STR event space, the appeal of the Preston Hollow country lane atmosphere and its homes is diminished.
There is a Ripple Effect of Home Prices Going Down Because of STRs
Let’s say a young professional living on the M Streets just made partner and wants to move to a larger house. Rather than obtaining $1,000,000 for their small Tudor cottage, because it is next to an STR, they can only obtain $900,000. If the young professional was planning on their next home costing $2,000,000, it would generally require a 20% down payment of $400,000. Since their M Street home only sold for $900,000, they might be left with just a $300,000 down payment, which limits them to a $1,500,000 house, leaving fewer buyers to compete for the $2,000,000 homes on the market. The owners of $2,000,000 homes end up selling their homes for less money, which impacts the purchase of their next $3,500,000 home. Even if the M Street homeowner has enough down payment or is possibly a cash buyer, they still have $100,000 less to spend if an STR caused them to receive $100,000 less for their home.
The Erosion of Home Prices is not Overnight, But it Endures
STRs cause an erosion of average home prices in almost imperceptible increments. A major loss to an individual homeowner caused by an STR does not greatly impact the average of all the sales. However, each negative sale gradually chips away at the value of homes. The number of STRs in Dallas is growing exponentially, which will hasten the decline in home values. When homeowners move out of Dallas because of an STR, this opens up the opportunity for another STR operator to take their place, eliminating another Dallas homeowner.
STRs Never Add Desirability or Value to a Neighborhood
STR owners don’t even want an STR next door. STRs never add value or desirability to a neighborhood. Homeowners don’t want to live next to an STR. STR owners don’t even want to operate next to another STR. If STR owners wanted to be next to other STR owners, they would be asking for STR-zoned districts that would consolidate the short-term lodging uses together.
Dallas is Outperforming Other Cities Because it has Better Single-Family Home Neighborhoods
Dallas is stronger than other cities because it has so many clean, green, safe neighborhoods in all price ranges. As a real estate broker, when I am showing Dallas to out-of-town homebuyers, they almost always remark on how clean and green the neighborhoods are. That is because Dallas has tree-lined single-family home neighborhoods where the neighbors know each other, they take care of their neighborhood.
The City of Dallas Needs to Nurture Our Single-Family Home Neighborhoods
If Dallas can nurture our neighborhoods like Munger Place by protecting them with single-family zoning and investing in the neighborhood’s infrastructure, families will stay in Dallas and move to Dallas. Business owners like Jon Jaimes, who has an office in Uptown, can better recruit employees moving to Dallas if he can show them safe, protected neighborhoods free of short-term rentals.
Single-family Home Neighborhoods are the Heart of a City
The health of a city can be determined by its single-family home neighborhoods like Greenway Parks as they are the heart of a city. Every type of resident – renters, condominium and townhouse owners, and homeowners – all want to be close to single-family home neighborhoods. D Magazine, as far back as 1976, had an article that touted the most desirable townhouses are located close to single-family home neighborhoods like Highland Park.
More Remote Working Decreases Demand for Offices and Increases the Importance of Homes
If workers are spending more time in their homes, they are more discerning of the home and the neighborhood it is in. Dallas needs to offer the most serene, safe, stable Dallas neighborhoods it can to keep homeowners and families in the city.
The Dallas City Council Needs to Double Down on Dallas
If the Dallas City Council believes in the future of Dallas, they will double down on the attributes of Dallas that make it attractive. Almost every urban center has museums and entertainment districts. Very few urban cores have beautiful, green, single-family neighborhoods. Dallas needs to keep STRs in areas zoned for STR lodging, protecting Dallas’ greatest asset: beautiful single-family home neighborhoods.