In a bid to address soaring housing costs and bring tranquility back to residential areas, Dallas has joined the ranks of cities like Austin by implementing stringent regulations on short-term rentals (STRs). This move, expected to be in effect by December, aims to alleviate housing inventory shortages and improve housing affordability. In this blog post, we delve into the impact of Dallas' short-term rental ban and its implications for the local real estate market.
The Dallas City Council recently voted to outlaw STRs on platforms such as Airbnb, VRBO, and HomeAway in residential zones. With housing costs skyrocketing and affordability becoming a pressing concern, eliminating short-term rentals from residential areas may restore peace and quiet to communities while potentially increasing the availability of homes for sale and rent.
Dallas-Fort Worth's median home price reached $405,000 in May, according to the MetroTex Association of Realtors. The area has experienced a staggering 71% surge in prices from Q1 2020 to Q1 2023, as reported by the Texas Real Estate Research Center's Home Price Index. Additionally, Zillow estimates the median monthly rent for all property types in Dallas at $1,950.
While considering various options, the Dallas City Council decided to outright ban short-term rentals in single-family areas, without grandfathering existing properties. The new regulations will also mandate legal STRs to pay hotel taxes, ensuring compliance with local tax obligations.
Data from AirDNA reveals that over 5,500 active short-term rental properties are listed in Dallas, while only 1,800 have registered with the city. Remarkably, this indicates that the number of properties on short-term rental platforms surpasses the available homes for sale in Dallas. In May, there were approximately 4,400 homes for sale, and in April, the count stood just under 4,000, according to RocketHomes.
Dallas has joined a growing list of cities nationwide that have implemented regulations or outright bans on short-term rentals. Austin, for example, approved an ordinance in December to crack down on unlicensed STRs, following concerns about revenue collection and the lack of licenses. were operating at the time, while only 1,875 were licensed.
While Dallas' short-term rental ban marks a significant step, legal battles and appeals are likely to follow in the coming months. Nevertheless, city officials anticipate the ban to be fully enforced by December, projecting a cost of $1.5 million and the hiring of nine new employees to monitor and enforce compliance.
Dallas has taken decisive action to curb the proliferation of short-term rentals, aiming to tackle rising housing costs and bring back housing equilibrium. The ban on STRs in residential areas is poised to have a profound impact on housing inventory and affordability, though it remains to be seen how legal challenges will unfold in the coming months.
