From KERA News:
Sarah Avakian found out she was losing the Fairmount house she’d called home for the past five years two months into 2022.
She’d known this day was coming — the landlord told her months earlier he was looking for a buyer. So it didn’t come as a surprise when in late February, she got the official news: The house had been sold, and she needed to be out by June.
What Avakian didn’t anticipate was the house’s new life as an Airbnb. When the new owner, Alexandria Salvo, came to take measurements, she offhandedly mentioned her intention to rent the space as a short-term rental.
“She was asking me how I like the area and asking me questions about it,” Avakian said. “And I’m like, ‘Girl. You’re kicking me out.’ Like, of course I like it here. That’s why I live here.”
As the revitalization of Fairmount and the Magnolia strip continues to gain steam, the once-neglected neighborhood has become a tourist hotspot. Avakian’s situation — and Salvo’s investment — aren’t unique.
“We have had a lot of demographic change and a lot of ownership change in the last 10 years,” Michael McDermott, director of historic preservation for the Fairmount Neighborhood Association, said. “It’s not easy sometimes. You get to know people, and they move away real quickly. Some people who have been there forever move away. And there’s new people constantly moving into Fairmount.”
Scanning through the Fairmount Facebook page nets posts detailing similar instances of long-term tenants losing housing to investors interested in starting a short-term rental. A quick search of rentals on Airbnb generates many listings touting the area’s restaurants, shops and general culture as selling points.
“This is right by hospitals, this is right by Magnolia Street,” Salvo said. “I feel like the location is pretty prime here.”
While Fort Worth considers updating its ordinance to allow short-term rentals in residential neighborhoods, warring interests between long-term tenants and would-be investors have become evident.
“Short-term rentals reduce the amount of homes available to homebuyers and traditional renters,” resident Daniel Hayes testified at a July 26 public engagement meeting.
The house at 1605 S. Henderson St. has been empty since it was purchased in March. Avakian occasionally walks past the house she previously called home, watching for signs of renovation to the property. Salvo initially bought the house intending to rent it on Airbnb, but she said she has started to consider other options.
“The exit strategy is still up in the air just because of what’s going on with the economy right now,” she said. “I’m not really sure what the market’s gonna look like. We haven’t even gotten to break ground yet on the property just because of all the plans and permitting and everything.”
Salvo lives in Dallas, and when she started researching property in Fort Worth, there were two areas that caught her interest: along Magnolia Avenue and near the Fort Worth Zoo. As soon as she found out Avakian’s landlord was interested in selling the property, she jumped on the opportunity to buy into the Fairmount neighborhood.
“We plan on adding about 800 square feet to the property,” Salvo said. “It’s going to be a three- bedroom, two-and-a-half bath with an office and, yeah, that’s kind of what I got planned for it.”
Tenants struggle to find new housing
Over the next several months, Avakian scrambled to find new housing in the neighborhood she’d grown to love.
“I don’t think I’m going to be able to live here anymore. That was my first thought, actually,” she recalled.
A teacher and community organizer, Avakian couldn’t see herself living anywhere else in Fort Worth. After searching for hundreds of hours with no luck, she finally found a 6-hour-old listing for an apartment in Fairmount and jumped on the opportunity.
“I got really lucky just with the timing and everything,” she said. “And I know that a lot of people not aren’t necessarily as lucky to find a place around here.”
One in two homes sold last year in Tarrant County went to an investor, company or corporation.
Tarrant County ranked third nationwide for the share of homes purchased by investors, at 52%, according to a report by the National Association of Realtors.
“That’s the thing about putting your house up for sale,” Shelby Kimball, a Realtor with Kimball Real Estate, said. “Whether you own it for your own personal use or leasing out to tenants, ultimately when you sell it you want to get the most bang for your buck.”
ReAlpha, an Ohio-based real estate investment company, made waves last year when it committed to spending as much as $1.5 billion to purchase homes and make them into short- term rentals. The company plans to target areas where it can buy homes in bulk, and take advantage of the end of the federal foreclosure moratorium.
“Corporate buyers, unfortunately, have taken quite a chunk of those (affordable) homes,” Kimball said. “We have seen a lot of those offers for full price or even over, and it’s in cash because they have a large fund to draw from, unlike the individuals who are getting a loan. So it eats up a lot of it. And it does concern us as Realtors, because we do need housing.”
Avakian is paying more than double the rent at her new apartment. She paid $500 a month at the two-bedroom Henderson home, splitting the $1,000 rent with her brother. Now, she pays $1,150 a month.
“This price is like the lowest that I found,” she said. “So I don’t know what to say about that, but that’s how housing is right now.”
McDermott has lived in the neighborhood for the last 40 years. While he’s sympathetic to rising housing costs and the squeeze felt by long-term renters, he isn’t convinced short-term rentals are the problem.
“I understand the need for rental and affordable rental,” he said. “Our rentals in Fairmount are not affordable anyways. Not for the people who need affordable housing.”
McDermott owns a short-term rental property in Fairmount located in a garage apartment. In the decades since he moved into the area, he’s seen a shift from predominantly long-term rentals to single-family homes and short-term rentals.
“We have friends in the neighborhood who have gone, and they’ve actually turned some of the crappiest little 1980s duplexes that were horrible, badly run badly managed long-term rentals and turned them into cute little Airbnbs,” he said.
Many people who buy homes in Fairmount for short-term rentals renovate and add value to previously rundown properties, he said. Salvo said when she is done with her planned renovations to the Henderson house, she estimates it will have a value of over $500,000.
“So I actually went to Roundtop, that big antique show, and I bought so much stuff because I was originally wanting to do this short-term rental,” she said. “And it was going to be like a Cowboys and Indian themed or an outlaws hideout type of themed Airbnb. And now I’m like, I got all this stuff in my storage. Am I even going to use it?”
Christine Voigt, a resident of the nearby Ryan Place neighborhood since 2008, said she moved to the area with the understanding it was residential in nature. She said short-term rentals mean people flow in and out of the neighborhood without contributing to the community in a meaningful way, and she would prefer long-term renters as neighbors.
“Long-term renters bring stuff to the community,” she said. “They’re polite and involved … We get to know long-term renters. We have cars broken into, and that can go on if you don’t know anyone.”
Owner-occupied or investor-owned?
As the city considers updating its regulations on short-term rentals, it has proposed treating owner-occupied and investor-owned short-term rentals differently. One option would allow owner-occupied rentals to be treated as bed and breakfast homes; another would allow them by right in certain neighborhoods or citywide, with a cap on the percentage per block.
Proposed regulations on investor-owned short-term rentals are stricter. One proposal under consideration would only allow investors to operate Airbnbs and the like in multi-family districts, and another would require them to secure a conditional use permit like a bed and breakfast inn.
Matthew Townsend and his wife operate one of Fairmount’s owner-occupied Airbnbs. The couple rent their primary home in Fairmount on Airbnb when they travel out of town. In 2021, they constructed a garage apartment unit in their backyard focused on longer-term Airbnb stays, 30 days or longer.
“We’ve kind of been focusing on longer-term stays because it’s easier for us as a host,” he said. “And I think it’s really good for the neighborhood because it does provide a place for somebody who needs a place to stay long term.”
Townsend said he’s provided housing to students in the past, as well as people looking for a new home in Fort Worth who need a place to stay during their search. The rising costs of housing mean there’s a need for stop-gap options, like longer-term Airbnbs, he said.
“The cost of housing in the South Side specifically is, I think, a reflection on the really great businesses that we have here on the South Side,” he said. “It’s a reflection on a lot of the work and the investment that the city has done. But I don’t know that it’s sustainable. And obviously we need places for teachers and firefighters and police people and all those people who don’t make well into the six figures to live.”
McDermott agrees owner-occupied and investor-owned short-term rentals are different beasts. He proposed the city issue a moratorium on new short-term rentals owned by investors, and do more research on the impacts of each type before rushing to make a permanent policy change.
“Go ahead and register them, that’s fine,” he said. “Charge a fee … tax them like a hotel tax, that’s fine. The people traveling will just have to pay for it, collect it and turn it in.”
Avakian, the Fairmount tenant, isn’t against short-term rentals entirely. She’s used them when traveling, and she said she understands the convenience that comes with it. A limit on the number allowed in the neighborhood, however, is important to ensure long-term housing is still available.
“I know it’s lucrative to have an Airbnb because you make more money,” she said. “Your profit margin is a lot higher than if you’re doing a long-term rental, but you need to consider the fact that people need places to live … I know you want to make more money, but we need places to live.”