Dallas is the latest city to clamp down on short-term rentals
This week, the Dallas City Council voted to ban short-term rentals from residential zones, with no exceptions for existing STRs.
Key points:
- Dallas joins other cities, including Austin, to introduce strict rules for short-term rentals.
- Many STRs are unlicensed, but it's likely there are more listings on short-term rental sites than there are homes for sale in Dallas.
- The new ban could be in effect and enforced as early as this coming December.
Short-term rental operators in Texas were dealt a major blow this week when the Dallas City Council voted to outlaw short-term rentals on sites like Airbnb, VRBO and HomeAway in residential zones. The move came as housing costs in Texas — and Dallas in particular — have soared to levels that rival some of the priciest markets across the country.
Booting short-term rentals out of residential areas could not only be a way to bring peace and quiet back to communities, it could also help bring much-needed inventory to the for-sale and rental markets. According to MetroTex Association of Realtors, the median home price in the Dallas-Fort Worth metro in May was $405,000. From Q1 2020 to Q1 2023, prices in the area have surged by nearly 71%, according to the Texas Real Estate Research Center's Home Price Index. Zillow pegs the median rent for all bedrooms and all property types in Dallas at $1,950 per month.
The Dallas City Council had debated several options — including grandfathering existing Airbnbs and other short-term rentals in residential zones — but ultimately, city leaders decided to outlaw them altogether in single-family areas. The new rules will also require that legal short-term rentals start paying a hotel tax.
According to the Dallas Morning News, only 1,800 short-term rentals have registered with the city, while AirDNA — an independent Airbnb data and metrics platform — shows that there are over 5,500 active properties listed on short-term rental sites. This means that there are more properties listed on short-term rental sites than there are homes for sale in Dallas. According to RocketHomes, there were 4,400 homes for sale in May. In April, there were just under 4,000 homes for sale.
Dallas has joined dozens of other cities across the country that have either imposed regulations on short-term rentals or outright banned them. While Dallas isn't the first municipality to put legal constraints on short-term rentals, it's safe to say it also won't be the last.
In December, the city of Austin moved to crackdown on unlicensed short-term rentals by approving an ordinance that would make it illegal to collect revenue or fees on such properties. According to local NBC affiliate KXAN, the city estimated there were a total of roughly 11,000 short-term rentals operating in Austin at the time, while only 1,875 were licensed.
Prior to last year's new ordinance, Austin's effort to control short-term rentals had been challenged by local short-term rental operators and a state appeals court that ruled in 2019 that parts of Austin's original short-term rental laws were unconstitutional. The judgment said that Austin city lawmakers' limitations on occupancy and a ban on events like weddings and other group events infringed on the constitutional right to peaceable assembly on private property.
While Dallas leaders made a big statement this week by passing the short-term rental ban, it will have to survive likely appeals in the coming months. However, a city official told the Dallas Morning News that they expect to see the new ban in effect and enforced as early as this December. The city is estimating it will cost $1.5 million and require a staff of nine new employees to monitor and enforce the new ban.