Understanding the Gap and Potential Solutions
With McKinney’s population consistently growing, housing is crucial for creating a thriving community where residents can work and live somewhere they can truly call home. Despite McKinney’s many beautiful homes, apartments, and townhomes, there is a significant shortage of affordable housing for residents with lower incomes.
The federal definition for “affordable” housing means that a person’s home does not cost more than 30% of a resident’s monthly income. This includes basic utilities, mortgage insurance, HOA fees, and property taxes along with the standard payment. According to McKinney realtor Julie Williams, “the average household income for the city of McKinney” is “$113,000 while the median price for a home is $500,000.”
“To qualify for a $500,000 home in McKinney, you need to make at least $100,000,” Williams said. “And just because you do that, that doesn’t mean you necessarily qualify because it’s also your debt-to-income ratio.”
Williams emphasized how “the schoolteacher, the policeman, the fireman, the restaurant worker” may not be able to afford a house in McKinney. A new teacher’s starting salary is $60,450 and after 20 years of teaching in McKinney, their annual salary increases to $68,950.
A $500,000 house would cost $2,395.25 a month with a 20% down payment. For a teacher making $68,950, this mortgage would exceed the 30% threshold by $672.24. If less than 20% is put down, which tends to be the case for many homebuyers, the monthly expense would shoot up, creating a greater disparity between income and housing cost. This calculation also doesn’t account for different expenses like HOA fees, water, and electricity.
“So they’re going to have to live somewhere else,” Williams said. “And consequently, there are jobs from here to there. Why are they going to drive all the way to McKinney if they can’t afford to live here?”
Apartments are also becoming less affordable, with 28% costing over $2,000 per month. The average gross rent in McKinney was $1,530 in 2021, increasing 15% since 2018. Williams explained that there are many different options for homes “from the lock and leave” to “big homes on acreages.”
“Now, we span that gambit,” Williams said. “But we do it at an expensive price. What we don’t have is a lot of affordable housing options.”
To address this problem, McKinney Front Porch was created to find affordable housing solutions. This task force contains three groups focusing on education and fundraising, ownership solutions, and rental solutions.
“We are just facilitators,” McKinney Front Porch Coordinator Scott Elliott said. “If we can bring folks together and help start projects that are for affordable housing, that’s what we want to do. That’s why we’re so urgent to get the first one started, because momentum makes a difference.”
Though they don’t have any specific projects started in terms of building affordable houses, they have been hard at work educating themselves on the problem. The financial task force is searching for grants to fund future projects. They are also putting together a presentation to educate landowners on a path to selling their land so more affordable homes can be built.
One potential project is purchasing land east of Highway 5, where Elliott estimates 10-15 townhomes could be built. To do this, Elliott hopes to use money from The Community Land Trust Program. The CLT program, proposed to the McKinney city council in 2021, aims to remove land costs from home prices by acquiring land through grants and donations. Developers then build affordable homes on this land, reducing overall costs.
“The CLT model is a powerful tool for addressing the affordable housing crisis in McKinney and beyond,” Interim Housing & Community Development Director, Cristel Todd said. “By separating land ownership from homeownership and partnering with various stakeholders, CLTs can create and preserve affordable housing opportunities for generations to come.”
As of May 21, the McKinney Housing Finance Corporation became a CLT enabling them to use CLT funds to buy land. MHFC is a non-profit organization dedicated to creating more affordable housing by co-developing properties on a Low-Income Taxing House Credit project. Developers who build or rehabilitate affordable housing units can apply for tax credits through the state. This allows developers to offer lower rents and gain equity from selling tax credits to investors. MHFC then uses the prophet gained to further affordable housing projects
There are many different paths to offer more affordable housing options, and different obstacles that complicate the issue. Elliott gave an example of how businesses have offered solutions.
“I’ve seen a couple of employers that dedicate some of their land to build housing on it, and then obviously, preferentially, allow their employees to rent,” Elliott said.
Additional Dwelling Units allow for houses to be built quickly, but the homeowners association doesn’t allow for ADU’s to be built in many neighborhoods. ADU’s are additional houses built on a property with a single-family home. Most of the people who have the land area for ADUs, and do not have an HOA, are east of 75.
“75069 is the most economically challenged zip code in McKinney,” Elliott said. “And yet that’s where most of the yards would be that could accommodate the building of an ADU.”
Because of economic challenges, few of our neighbors in that zip code can finance an ADU on their land. And with HOA laws prohibiting ADU’s in a lot of other subdivisions, this less expensive option for creating affordable housing becomes almost impossible to do.
“If we could figure out a way to get ADUs financed and done, I think that would be a huge deal,” Elliott said.
With tons of pathways for creating affordable housing, there is still a lot of work to be done and challenges to overcome on this journey.
“This is not a fast, easy problem to solve,” Williams said. “But what I love about McKinney is, I think that McKinney is trying to make it a priority.”
Written By Heather Aldridge, Editorial Intern | McKinney Chamber of Commerce
