- Sabine Fletcher's home in the Dallas suburb of Bishop Arts will be demolished by the end of 2023.
- She says developers have taken over her neighborhood and it's making housing unaffordable.
- What's happening in Bishop Arts is taking place in communities across the country.
Sabine Fletcher's home is set to be demolished by the end of 2023.
That's because she lives in Bishop Arts, a Dallas suburb 3.3 miles from the city center, 15.1 miles from the new global headquarters of engineering giant AECOM, and in a desirable location for real estate investors.
Bishop Arts, a district of the Oak Cliff neighborhood, calls itself the most "independent" community in Dallas. Known for its small businesses and local art scene, the area is home to many families of color and students at nearby Southern Methodist University, the University of North Texas, and El Centro College.
But now residents are readying for — and fighting against — a makeover. The district has seen almost 4,000 new apartments built since 2012, and there are currently seven multi-family developments under construction, including a new project spearheaded by Lennar Multifamily Corporation, to the dismay of many who live there.
"It's depressing seeing the neighborhood's character being completely destroyed," Fletcher told Insider.
The Charlotte-based real estate company owns all but one property on the 500 block of 8th street — it intends to demolish them all. Quaint 20th century complexes that once provided renters with affordable prices will be replaced by 225 market-rate apartments. In today's overheated housing market, "market-rate" is unaffordable for the typical renter.
What's happening in Bishop Arts is taking place in neighborhoods across the country. Investors hoping to make a profit in underdeveloped communities have disrupted housing ecosystems and priced out locals. As national home and rental prices continue to hit record highs, housing affordability has plummeted almost everywhere Despite three years of rapidly rising housing costs, in Bishop Arts and similar neighborhoods nationwide, the affordability crisis is just getting started.
"My neighborhood has been overrun by developers who are kicking families out of rental houses to create unaffordable high rises," Fletcher said. She and her neighbors are not the only ones.
Investors are driving up prices
Investors looking to make a profit have increased their presence in the real estate market over the past few years, which has pushed out families looking to make a home.
Last June, investors purchased 24% of the single-family homes sold in the US, according to CoreLogic researchers. By the end of September, that share reached nearly 27%.
In Dallas-Fort Worth, which became the top real estate investment market in 2021, investors pumped almost $47 billion into real estate during the year. During that time, Lennar – which owns several projects across Texas — has seen its revenue increase by 24% to $8.4 billion.
The more investors in the real estate market, the more expensive housing becomes. In 2021, real estate deals by investors were responsible for increasing prices more than 20% on average, according to Moody's Analytics. With rents hitting an all-time high of $1,792 and home prices exceeding $405,000 — many normal renters and buyers have been left in the dust.
"This is not a healthy market," Mark Zandi, Moody's Analytics chief economist, said in a housing report. "It feels like it is getting very stretched. Investors will buy until it no longer pencils out. Then what happens with prices?"
City's incentives to attract companies are cause mass migration
In an effort to increase profits, many companies have relocated their headquarters to business-friendly markets like Texas and Arizona, where state and city governments entice them with tax breaks and no personal income tax. As they open up shop, investors have capitalized on the housing needs of their migrating employees — all while leaving locals in the dust.
According to Redfin, Phoenix was the most popular US migration destination of 2021, followed by Dallas and Orlando. Over the past few years, companies like San Francisco-founded delivery company DoorDash, San Jose-founded manufacturing company Viavi Solutions, and Silicon Valley-founded online marketplace Moov Technologies have relocated to the area, bringing thousands of new residents to Arizona. Between January 2021 and January 2022, home prices surged 33% in the state.
"With out-of-towners driving up home prices in Phoenix, a lot of local first-time buyers have bowed out of the market," Heather Mahmood-Corley, a Phoenix Redfin agent, said in a housing report. "They just don't have the cash to compete, especially when there's such limited inventory."
Locals often face rising housing costs in areas where these businesses have relocated— especially in markets like Dallas and Phoenix where rents have risen by 21% and 28% year over year, respectively. This is because investors hoping to make a profit, typically increase prices to meet the income levels of new residents moving from higher cost-of-living locales.
"I've seen my neighborhood go from very long- term families to people with no connection to the area and rich property developers," Fletcher said, adding that if she's expected to pay higher housing prices in Bishop Arts, she'd rather move to Austin or New York.