Hurricanes Couldn’t Destroy Galveston’s Spirit. The Vacation Rental Boom Just Might.

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In the decade that she’s lived in Galveston, Cody Wright has become accustomed to a familiar routine each time a hurricane batters the city. As soon as it’s safe, she ventures into the streets to assess the damage and check on her neighbors, a simple gesture that has likely been practiced for as long as humans have occupied the vulnerable barrier island off the Texas Gulf Coast. But in the hours after Hurricane Nicholas washed over the island in mid-September, dumping nearly a foot of rain and filling local streets with debris, the 39-year-old mother of one was struck by how drastically her neighborhood had changed. Her block, located a short walk from the tourist-attracting Pleasure Pier, was no longer home to the familiar faces she’d come to know over the years. Several of her neighborhood’s nicest homes, most of them historic two-story abodes with views of the ocean, now stood completely empty, the result of the buildings being converted to short-term rentals on platforms like Vrbo, Vacasa, BeachBox and Airbnb, where they are available, in some cases, for as much as $1,000 a night. 

Hurricane Nicholas may have left only minor physical damage in its wake, but for Wright, the storm illuminated a more lasting form of local destruction. “I feel like there’s less community here than there used to be because of all the short-term rentals,” says Wright, who lives behind a vacation rental that can house eight people a night but is empty, she estimates, about five days a week. “If you need help or you have a question, or if there was a fallen tree or shingles in the street after a storm, I wouldn’t even know who to contact or if the owner even lives on the island.”

Wright, like so many transplants, arrived in Galveston in her late twenties and quickly felt at home on the unhurried, sun-soaked island. The Idaho native never stopped pining for the Pacific Northwest’s mountainous terrain, but Galveston promised something that was, in some ways, even rarer: a laid-back coastal lifestyle at an affordable price. She bought her first home, a two-bedroom starter, in the heart of the island, for less than $100,000 and has since purchased several more properties. Launching a successful bookkeeping business, surfing after work, and relaxing with friends in the island’s eclectic coffee shops, Wright couldn’t shake the feeling that she’d stumbled upon an open secret. “I fell in love with Galveston and the people who live here,” she says. “If you found this lifestyle in Hawaii or California, you’d end up paying millions.” Now, ten years after she arrived, with local vacation rentals proliferating, locals being ousted, and her property taxes increasing 70 percent last year alone, she’s tentatively begun eyeing a return to Idaho. 

Galveston, perhaps more than any other community in Texas, has always been at the mercy of powerful forces beyond its control. For that reason, the city has a cyclical history of decimation followed by resilience and reinvention. But in some ways, the latest forces to descend upon Galveston feel more powerful, and potentially permanent, than anything that originates in the Gulf of Mexico. When Wright moved to the island in 2011, a middle-class family could find a spacious home in the heart of Galveston for less than $150,000. But for years now, the island’s home prices have been skyrocketing, so much so that the local market’s average price has, at times, topped even big cities like Austin and Houston. It’s a trend that many Galvestonians trace back to 2008’s Hurricane Ike, which destroyed thousands of local homes. Middle-class and low-income homeowners without insurance were devastated, but local residents with insurance were able to renovate and rebuild, using the crisis to generate wealth that has added to social stratification. The pandemic has amplified those existing economic trends, prompting a wave of wealthy buyers—mostly from Texas, but from as far away as California and New York—to descend upon the island in search of second homes and investment properties, unleashing bidding wars and placing even more stress on Galveston’s meager housing stock. Today, the island’s average home goes for nearly $300,000—a 22.6 percent jump from last year, and almost twice as much as the average cost a decade ago. 

In some ways, Galveston’s gentrification is far from unique. Over the past year, the same increasing prices, coupled with unyielding demand for limited inventory, have displaced locals in vacation destinations across the country, from Crested Butte, Colorado, to Lake Tahoe, California, and Bozeman, Montana. The difference, locals say, is that none of those towns share Galveston’s geographic limitations or its traditionally large middle-class population. “You see a lot of places around the country where short-term rentals have been eating up the rental and housing market, so it shouldn’t surprise anyone that it’s happening in Galveston as well,” says David McClendon, a demographer and data scientist with January Advisors, a data science consulting firm headquartered in Houston. “The difference is that it’s happening much faster here than among the adjacent cities on the mainland.” 

In many parts of Galveston, it’s nearly impossible to go a block without encountering one or more short-term rental homes, which range from tiny garage apartments to sprawling Victorian mansions in historic neighborhoods. Their facades are often brightly colored, with automatic lockboxes on the front door and kitschy signs with expressions like “Welcome to paradise” overhead. A golf cart, many visitors’ preferred means of transportation, parked out front is considered a telltale sign that local housing has been ceded to the vacation rental market. Of the island’s 30,000 homes, estimates suggest that about 5,200 are currently being used as short-term rentals (though some locals believe the number is higher because of unreported units). That number has increased by about 1,000 homes each year since 2019, according to Vision Galveston, a nonprofit that advocates for more affordable housing on the island. Over the past three years, according to the organization, the island has seen a 125 percent increase in short-term rentals.

In areas like District 2, a traditionally working-class neighborhood sandwiched between downtown and the seawall, it’s not uncommon to find streets where more than a dozen homes are vacation rentals. Some sit mostly empty, but others are frequently full of rowdy vacationers who roam the neighborhood in golf carts and fill normally quiet streets with traffic and the sound of all-day parties. “It can create havoc, with cars everywhere, trash in streets, and blaring music,” says Rob Lewis. The 42-year-old Galveston Independent School District teacher grew up in Galveston and inherited a home that his grandfather purchased in 1947, but worries that rising property taxes could eventually push him and his fiancée off the island, especially if they decide to start a family. “The vacation homes take away from that community spirit and that sense of ownership a neighborhood needs to have a real identity,” he says. 

In a city already beset by low inventory and expensive housing, with teachers, firefighters, and young professionals already being forced onto the mainland, many locals worry that Galveston is transitioning from an affordable, ethnically diverse community to a wealthy, racially monolithic island resort utterly reliant upon transient labor from across the causeway. The city, which is currently about 50 percent white and 30 percent Hispanic, has lost more than 40 percent of its Black residents over the past two decades. The economic impact of short-term rentals has been sudden and prolific as well. In 2018, vacation rentals made up 29 percent of all hotel-occupancy tax payments, according to city data. In the first half of 2021 alone, that number increased to 42 percent

“The market has already taken over,” says Betty Massey, a longtime Galvestonian who has served on a number of local boards, including the city’s chamber of commerce and the local housing authority. “Some people will say that’s okay because the vacation rentals and second homes make financial sense for so many people. But if you want to be a real American community, with a mixture of retirees and working families and firefighters who live here and coach our Little League teams, then you can’t just leave it up to the market.” 

Not everyone is troubled by the influx of new residents. For years, fast-talking real-estate agent Christina Johnson and her husband Jeremy, who helps buyers renovate dilapidated properties to enhance their visual appeal on vacation-rental websites, have been capitalizing on the overwhelming demand for island real estate. The couple—who proudly claim to know more about short-term rentals than anyone else on the island—moved to Galveston from Southern California in the eighties, and like to joke that they envisaged the island’s current boom decades in advance. Though Galveston began to appear in national travel magazines before the pandemic, the island’s current popularity is closely tied to COVID’s arrival. Not long after it began, Christina Johnson says, Texans, unable to fly and cooped up indoors, realized that if they were going to be prisoners in their own home, that home might as well be on the beach. What has followed, the couple says, is a real-estate “gold rush” that has yet to slow. Sellers can expect to receive dozens of offers, many in cash and significantly higher than the asking price, for their homes. 

“We just got into a bidding war for a seven-hundred-square-foot house in Jamaica Beach that had fifty offers and eventually went for more than four hundred thousand,” Johnson says. She estimates that 80 percent of the calls she gets from prospective buyers come from investors looking to purchase a home that can be turned into a short-term rental or a fixer-upper that can be quickly flipped for profit. She’s quick to caution overeager buyers that buying properties won’t lead to overnight riches, she says. But they can build a steady source of income ranging from $30,000 to $60,000 per year, depending on a home’s size, amenities and location. “Galveston has never looked better to investors than it does right now,” says Johnson, who also started a cleaning business for her clients’ short-term rental properties. “If you own an outdated Victorian condo that makes ninety-nine dollars a night, adding some basic renovations means you can start charging two hundred dollars a night, which quickly adds up.” 

Johnson has heard the criticism about the vacation-rental market altering Galveston’s quality of life, but she believes critics ignore the financial benefits that short-term rentals offer the city. “Every time a guest books a short-term rental, the city receives nine percent profit off the top,” she says. “That’s a lot of darn money, and we’ve seen improvement after improvement around town because of it.” 

Keath Jacoby, like many other Galvestonians I spoke with, doesn’t think full coffers make up for the burden unaffordable housing places on many local families. When Jacoby, 39, the original director of Vision Galveston, was growing up on the island in the eighties, she lived down the street from her teachers, her pediatrician, and members of the police force. She remembers the city as a “real hometown community,” a place where her neighbors lived and worked on the island full-time while they raised families. Some of those same families began to move off the island in the nineties, a trend that accelerated after Ike. 

Since 2010, Vision Galveston estimates that Galveston, which is home to about 50,000 residents, has lost nearly eight hundred families with children, a 16 percent decrease in local families, though many of the adults continue to commute to the city each day for work from towns within a half-hour drive, such as La Marque, Dickinson, and League City. The organization has found that the island is being drained of children, particularly those who are Black and Hispanic—meaning that home-owning families have been leaving the island at the same time that the number of renters is increasing. “You don’t need to be a data scientist to know that when you start losing young families, there’s going to be an economic impact and a talent-retention challenge,” Jacoby says, adding that she knows a pair of small-business owners who have been forced to move in with their parents because they’re unable to find housing. “These are respected entrepreneurs, the people who are making the local economy hum, and they can’t afford to live here.” 

If he were made king for a day, District 2 city councilman William Schuster, who teaches a course focused on local history at Ball High School, says he would command developers to build affordable-housing units on city-owned land. Schuster, a seventh-generation Galvestonian, agrees with his neighbors that short-term rentals play a role in the city’s housing crisis, but he’s reluctant to assign them excessive blame. Rounding out the problem, he says, are low wages, limited housing supply, and the high cost of wind and flood insurance. “I’ve seen countless teachers who are not from this area move here for a job and like working here, but will tell you they left for the mainland because they can spend half as much and get a backyard in a subdivision without the high cost of insurance,” he says. Schuster believes many of the island’s large historic homes, which require more maintenance than many families are prepared to undertake, are often best utilized in a short-term capacity. Even so, he said, the rising number of vacation rentals is creating vulnerabilities that are unique to Galveston. “What scares me is the next hurricane,” Schuster says. “What happens when you have a collapse in the tourism industry and suddenly you have thousands of vacant homes on the island for the next year?” 

Torrina Harris, a Galveston poet and young professional, has spent months looking for safe, affordable housing for herself and her ten-month-old daughter. She would like to commit to the island long-term, but says the lack of affordable housing is forcing her to consider a move to the mainland.Photograph by Peter Holley

Despite its proximity to the seawall, there are times when Cody Wright’s block already feels eerily vacant. For years, families were a visible presence in her middle-class neighborhood, which sits on the edge of the Silk Stocking Historic District. Several of them used to be packed into a run-down two-story stucco multiplex perpendicular to her home. But over the past year, the stucco was removed and the building refurbished, its light-brown exterior painted in a bright shade of teal. Within a few months, two family homes down the block were fixed up and painted in pastel purples and pinks, the occupants seeming to disappear without warning. Across the street, two more homes underwent rapid makeovers. 

Today the street, marked by towering palm trees and newly planted flower beds, has been transformed, its polished, brightly colored homes resembling a scene from a Caribbean postcard. There’s only one problem, as Wright pointed out while we strolled down the street on a recent afternoon. “There are no more people around,” she said. “It’s a ghost town.” To be fair, we did encounter several young women, hurriedly carrying cleaning supplies between the vacation rentals that have been set up in every refurbished home. Their presence gave the area the feel of a giant open-air hotel, minus bellhops and valets. 

Along Wright’s block alone, we counted at least fifteen short-term rental units. On surrounding blocks, there were many more. Tallying them up as we strolled the area, even Wright was taken aback by how much the area had changed over the past year. “Very recently, this was a middle-class neighborhood with kids riding their bikes and families who had been here for years,” she said. “The irony is that everything looks beautiful now, but all the things that made me fall in love with Galveston, the things that made this a real place, are disappearing.” 

Even salaried professionals who’d like to remain in Galveston long-term have begun to find it difficult, if not impossible. It took Vivian Victoria about a month this spring to realize that buying a home in Galveston, where she had been renting for the past year, was not an option. The homes within her budget, in the low two hundred thousands, needed tens of thousands of dollars in renovations. Those that were move-in ready, however, were typically more than $100,000 above her price range. Despite being a young professional working for the Kempner Fund, a philanthropic organization dedicated to preservation and community development, Victoria ended up buying a home in Dickinson, a city about halfway between Houston and Galveston. “A large part of my job is about relating to the community and making it better,” Victoria said. “It’s a connection I would like to forge myself, but I don’t get to experience living here.”

The housing crunch is affecting renters as well. Torrina Harris, a soft-spoken 26-year-old poet and community advocate, also counts herself among those who’d like to invest in Galveston but are struggling to do so. Harris moved to Galveston from League City in 2016 to work for the University of Texas Medical Branch, but has more recently begun working as the program director for the Nia Cultural Center, a Galveston nonprofit that offers young people mentorship and skills training. Despite bringing home her first professional salary—and a rental budget of nearly $1,200—she is struggling to find adequate housing for herself and her ten-month-old daughter. Tired of living in a two-hundred-square-foot apartment and bathing her toddler in a plastic kiddie pool in the shower, she’s spent months looking for a dwelling in a safe area with a bathtub and, ideally, a washer and dryer. Harris is intent on remaining on the island, close to her workplace and among the professional contacts and friends she’s spent years cultivating, but her daughter’s well-being is her first priority. “How is it that I have no felonies, my credit is good, and I can make four times the rental price each month,” she says, “but there aren’t any options for me?” 

Without adequate housing at a reasonable price, she worries she’ll be forced to move back to the Houston suburbs, away from the rapidly changing city that has become her home in recent years. Harris says, “I love Galveston and I want it to love me back, but it feels like I’m being dumped instead.”