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Silvia Escamilla, 63, has lived in her East McKinney home ever since her dad, who was a concrete finisher, built it in 1974. She’s seen the La Loma neighborhood, where she grew up, change.
In the past few years: More renters have moved in, and new-build houses have started to pop up in lots where particle board, ranch-style homes — like her own — used to stand. The value of these new builds can be at least $300,000, she said, a high price tag for an area where the median income is $42,036, less than half of the city’s median of $90,272.
The rising values are, in-part, a result of the development pressure coming across State Highway 5. The city’s Comprehensive Plan notes that this area is the only one of the 17 districts in the city with any significant redevelopment potential. Until recently, growth in the city didn’t cause such pressures, but now, with projects like the city’s new municipal center, a master plan for Old Settler’s Park and the Tupps Brewery relocation taking root, home values and rent rates are rising.
As development causes values to rise, homeowners may have to deal with rising property taxes, but renters are the most vulnerable to displacement, said Heather Way, a professor and director of the Housing Policy Clinic at the University of Texas School of Law.
East McKinney has seen a “significant shift” to rental from homeownership since 2010 with nearly 60% of households renting their homes, compared with the city, where only 33% of households rent, according to the East McKinney Neighborhood Preservation Plan.
“[This] increases the vulnerability of the population to displacement,” the plan said. “This shift, particularly in conjunction with other trends and factors, makes preservation and stabilization more important but also more challenging.”
To understand how to preserve these neighborhoods east of Highway 5 and prevent displacement in the face of such pressures, the city has been working with Economic & Planning Systems (EPS), a consulting firm that conducted a preservation study and formed the preservation plan that points to ways to help homeowners and eventually slow the shift from homeownership to renting, something the area has seen in the past decade.
The city also has safeguards in place for current renters to help with displacement pressures faced by renters.
Why the shift from homeowner to renter?
The shift to rental from homeownership in East McKinney since 2010 has been more pronounced than in the city overall.
About 57.7% of the housing units in East McKinney are renter occupied, a 12-point shift from 2010, when about 45.5% of homes in the area were rented. The city’s rate of homeownership has also declined since 2010, but only by a 4-point shift — from 71% to 67%.
“Market pressure in East McKinney is increasingly limiting the ability for East McKinney residents to move from renting into homeownership,” according to the preservation plan. “At the same time, rents in the area are high and so the expenditure increase from renting into owning may not be as significant as it used to be.”
Another possible reason for the shift could be that home sale prices are high and have been increasing, particularly relative to household incomes, the plan said.
Janay Tieken, director of housing and community development with the city, noted that the per square foot price of homes in East McKinney has risen faster than it has in the rest of the city, adding to the challenge of homeownership.
This is especially difficult as East McKinney lags the rest of the city in terms of economic and social well-being, the study said.
Key recommendations
To eventually slow this shift and address displacement pressures, EPS recommended establishing a community land trust, a rental inspection and rehab program, possibly creating an affordable housing requirement within the existing tax increment reinvestment zones, support for accessory dwelling units and focusing on connecting residents with existing programs for matters such as property tax support and clear title.
Council member Justin Beller, whose district is largely located in East McKinney, said he has “high hopes” for the community land trust but has yet to see a plan that would carry it out, as council may differ on how best to execute it. Yet, he said it would help with the high barrier to entry into homeownership that exists today.
“A community land trust is typically a nonprofit organization that owns land in a shared equity structure, keeping land (and thus housing) affordable,” the preservation plan said. “A CLT will acquire land (or existing housing) and own the land in perpetuity while residents can purchase and own homes with low-cost long term ground leases.”
Beller also waved to accessory dwelling units as something that could help an individual who already owns a home supplement their income or improve the functionality of their property.
“It may give them options for what to do going forward because a lot of times decisions are made for property because of its usefulness or functionality, and if that has shifted then you may end up with a trigger to sell, and this gives people options to maybe not have to sell when those circumstances come about,” Beller said. However, he said this would come with some risk, as it could make properties more valuable to investors.
In addition to the study’s recommendations, which would largely help homeowners, the city already has some programs in place to help renters with rising costs, including the tenant-based rental assistance program funded through the Texas Department of Housing and Community Affairs. Income eligible participants only pay 30% of their income for rent, and the grant funded program makes up the rest, Tieken said.
“The program runs for up to 24 months, which gives people time to get permanent housing choice vouchers or prepare themselves — with additional schooling, certifications etc. — to be able to pay market rent,” she said.
Even with safety nets in place, Escamilla said she worries about her neighbors being able to stay in their homes, and as renters move into the neighborhood — which is largely younger and more diverse compared to the rest of the city — she watches her once close-knit community change, a fear that will be hard to assuage.
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