Spotting the Rare Cheap Rental

Do you know that little stone house at Eighth and Waller streets, set up high on a stone retaining wall, behind a stand of agaves and redbud? That's where I live. That's the house I'll be leaving soon. I write to deliver a piece of news; in the last two months, my landlord, Ramiro Diaz, and his wife, Mary, have both died, and the estate is selling the house (asking price: $180,000). When it passes into new hands, there will be one less great cheap rental house in Austin.

Good houses, renting cheaply, once roamed the neighborhoods of the central city, but I live in the house that time forgot. Two bedrooms, 1000 square feet, well built by Mary's father, Jack Guajardo, in 1946 – strong, solid, not a dump. "Impossible!" the real estate agents crow. My friends often admired it, some urging me to buy it (I wish), others plotting revisions of their own to the architecture.

The neighborhood, laid out on rolling streets, is no slum, though it long bore the stigma of being on the Eastside, which helps explain, in part, the rent. Now, for many, the Guadalupe neighborhood is simply "central." I will miss that fact – I ride my bike eight minutes to my job at the university, or five minutes in the opposite direction to Town Lake. I'll also miss the original wood, the pale stone of the facade, how high it was from the street, the grand view of the new Hilton and Frost Bank Tower from the back patio – a sort of bohemian's penthouse. But even with the Downtown view, the house possesses an ineffable stillness that makes you feel as if you're in the deep woods. This is a house with charisma, not just architectural character, in a neighborhood that has always cared for its own.

From May to November 2002, I paid $475; in November, the rent rocketed (after a very apologetic phone call and letter from Mr. Diaz) to $500. Since March of this year, I've split the $500 with my girlfriend. This means I pay $75 less now than when I came to Austin in 1993 for graduate school, when I split a $650 duplex in the 2800 block of San Gabriel. Low rent was just as crucial to my lifestyle as a graduate student as it's been for me now as a writer, and I'm grateful.

But arrangements like mine, once endemic to Austin, have for years now been viewed as not just endangered but extinct. Doomed by the inexorable march of progress, etc. Housing talk tends to the nostalgic, wistful for the days when redneck rock was still a-rising, even though all these years at least one exemplary specimen of the Cheap Austin Rental survived at Eighth and Waller. Unfortunately, all I have to show as evidence is the corpse, as if I pulled up a giant squid in my fishing nets, or realized that the dove I just shot (if I shot doves) was actually a passenger pigeon.

Still, we can ask: What happened to keep this one alive so long? Did it persist for exceptional reasons we cannot duplicate, or for common ones we could still preserve? Might there still be specimens of Cheap Austin Rental out there, like salamanders hidden in the depths of caves? And can we breed them in captivity and release them back into the wild?

---

Friends and Neighbors

To get some historical perspective, I called Phil and Janet Crossley, who rented the house at Eighth and Waller from 1995 to 2000. The previous renters, friends of theirs who had lived here since 1985, recommended the Crossleys to the Diazes, who sealed the lease with a handshake. (In 2000 the Crossleys passed it to other grad school friends, Sergei Bogdanov and Lisa Redford, who passed it to me.) Phil, now a geography professor in Colorado, reported that during their stay, the rent went from $450 to $475.

That means that since 1995, the rent has increased about 11%, even though the assessed value of the property (according to the Travis Central Appraisal District) jumped nearly 400% (from $46,606 in 1998 to $191,353 in 2002, though it's fallen to $163,599). During the same period, housing prices in the U.S. went up about 50% (though to keep things in perspective, you have to realize that prices rose nearly 125% in Spain and 115% in Britain in the same period).

But Ramiro Diaz was not a rent raiser. Back in the 1960s, he had run his father-in-law's grocery store, then sold it and bought a radio station, and over time accumulated houses in the Guadalupe neighborhood and elsewhere. This wasn't the only house whose rent he kept low – and whose occupants didn't complain about the lack of deadbolts or grounded electrical sockets, or who just installed them on their own. (To give Mr. Diaz credit, he was always prompt with serious repairs.)

There are actually two houses on the property at Eighth and Waller, one occupied by a family, the Hernandezes, who rented from Ramiro for 15 years. According to Ramiro's son Roland Diaz, his father often forgave them months of rent if they hit hard times, then would bring by bags of groceries.

The low rent, Phil Crossley surmises, helped Ramiro Diaz find and keep dependable, decent, respectable renters who fit his reputation. Even though the house was long paid for, and the Diazes had themselves moved elsewhere, Crossley says, "he considered himself part of the neighborhood [and] he didn't want the neighbors bad-mouthing him because of who the renters were." Crossley thinks Diaz knew precisely what money he could make on the property, but chose not to because other priorities mattered more.

According to Katherine Stark, the director of the Austin Tenants Council, it is the landlords with small portfolios, like Mr. Diaz, who are easiest to deal with, most flexible on rents, least likely to do credit checks or background checks. If you're a student or a creative type looking for cheap rent, Stark advises that you drive the neighborhoods and look for signs. "It's the same advice I give to people who are felons," she says.

The house's family history also plays a role. I live in the house that Mary and Ramiro, at the time an employee of Jack's at the Guajardo grocery, lived in when they first married; when Jack died, Mary inherited it. What kept the rent low was this personal history, which seems fairly common. I've lived in other such houses in Austin, like a white clapboard three-bedroom bungalow at 46th and Red River, where I paid one-third of $750 rent from 1995 to 1998. (The rent went up to $1,000 in 2000, after I moved out.)

Could both families have made gobs more money? Sure. Are people who profit from selling family homes any less attached to them? No, not necessarily. But in both cases, a sentimental attachment to a house stayed the invisible hand of the market. In the case of my current house, this trade-off helped at least three people to begin careers, start families, and put down their own Austin roots.

It is also common for a house passed among friends to have lower rent. Such social connections give an advantage to landlords: A friend of a friend comes with an automatic reference. Economic research demonstrates that denser social networks keep prices low; social disconnection raises prices. The University of Michigan sociologist Wayne Baker has shown that the prices of stock options are less volatile when options are traded among a smaller group of stock traders. Contrary to what you'd think, a smaller market (because it involves fewer people) is actually the more competitive one; the larger social group has to deal with too much information to make decisions that could be considered rational.

If my house remained in the Diaz family, and within the circle of friends who've been its tenants, its rent could remain low, but Roland Diaz says he's not interested in being a landlord. (Fortunately, according to Katherine Stark, the number of small landlords is remaining steady in Austin, particularly on the Eastside.) So the rent on this house will rise, as it will on the 800-square-foot, four-room casita where the Hernandezes live. At one point I figured we should try to buy the property, my girlfriend and I, and use the rental income from the Hernandez's house to help with the mortgage.

But when we toured the casita with the real estate agent, we were stunned by the amount of work that would need to be done – the amount of work that Ramiro Diaz had let accumulate. Martin Hernandez, the head of the family, was pointing out repairs he'd done himself. I asked the real estate agent how much she thought the casita could rent for. "If you fixed it up," she said, "you could get $950 for it."

The Hernandezes were watching us: Martin, his wife, his kids, his mother, who was lying on one of the four beds pushed into each of the bedrooms. And I decided I didn't want to be the one responsible for removing this family.

Right now, I can get a mortgage, so we're buying a house. What will the Hernandezes do? I don't know. (Note: I've since learned that the house was purchased by architect Tom Hatch, who lives across the street; while he and his wife are planning to fix up the casita, they intend to accommodate the Hernandezes.)

---

Economy and History

The market – any market – is not just an economic phenomenon, but a social one that emerges from history. Eighth and Waller was a Cheap Austin Rental for many reasons, but it and all its neighbors were cheaper than most because they lie east of the arbitrary historical artifact of the highway. Back in the early 1900s, today's Guadalupe neighborhood was a relatively swanky suburb for Anglos who – like they do now – want to live near Downtown.

But in 1928 – the year of the founding of my neighborhood's namesake landmark, Our Lady of Guadalupe Church – Austin's first adopted city plan called for "all facilities and conveniences for the Negroes" to be located in today's Central East Austin, as an incentive for African-Americans to move out of established minority neighborhoods elsewhere (like Clarksville and Wheatville). This led to an exodus of Anglos, and then to a further influx of Mexican-Americans; by 1937, when the nation's first public housing projects broke ground in East Austin, it was already established as the nonwhite part of town.

Later, integration and fair-housing laws brought another wave of change. Says Mark Rogers, the executive director of the Guadalupe Neighborhood Development Corporation – a nonprofit that builds and owns affordable housing in the area – from 1970 to 1980 the Guadalupe neighborhood lost one-third of its population and one-third of its housing to demolition and arson. Rehabbing, infilling, and concerted efforts by folks in the neighborhood had made the place a desirable place to live again by the mid-1990s.

But for a while before then, Rogers (who's lived in the neighborhood since 1986) says, "the neighborhood was rough. You'd clean up the hedges and find multiple syringes, pick up the condoms. Friday and Saturday nights from 10 to 4 in the morning, it was an Indianapolis 500 of trucks driving around and around. It was prostitutes, people buying drugs, gunshots, getting stabbed, all that stuff." For every person who swooned at the big, cheap, charming houses, nine were scared away by the crime and vice. Only devoted newcomers like Rogers stayed.

You don't need to be so devoted nowadays, as evidenced by the Saabs and Lexuses swooping by now to peer at my house – they wouldn't be swooping by if this were 1985. On the morning the house was listed in the Austin Multiple Listing Service, the real estate agent received six calls in the first hour. A flood of people trooped through the house. A "For Sale" sign sprouted in the front yard. The end was near.

It's become clear to me that Eighth and Waller isn't really the last Cheap Austin Rental. Last week, I heard about a two-bedroom house at Second and Waller, where two men were living for $100 each, paying an elderly owner. That owner just died. All good deals come to an end. Now the owner's daughter is moving into the house, apparently to rehab it and sell it again. And the herd of Cheap Austin Rentals will again diminish by one.