The Supposed Gentrification of Denton

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Is Denton experiencing gentrification? Citing rising property values, changes in the downtown business make-up, new development in our urban core, and several anecdotes about people not being able to buy a house or afford rents, many in town are taking to social media to claim that we are. Even our local newspaper is chiming in, forwarding the narrative that downtown is in trouble and the Denton Creative Class is being forced out.

Let’s bring some data to the discussion.

But first, let’s define the question. According to a dictionary, gentrification is “the process of renewal and rebuilding accompanying the influx of middle-class or affluent people into deteriorating areas that often displaces poorer residents.”

This definition shows why the phenomena is generally found in certain areas of our nation’s urban centers, usually following a renewed interest in downtown areas that have been neglected for decades thanks to the growth of suburban America post-World War II. You don’t refer to a city, as a whole, undergoing gentrification, rather you point to a particular neighborhood that experiences significant change over time.

There’s also significant back-and-forth among urban planners and urban researchers as to the problems gentrification brings and whether managed gentrification can be good for underserved areas.

It is important to understand what gentrification is not (according to all definitions):

  • a general rise in property values that track across a city and track with trends state and nation-wide
  • a housing market that makes it difficult for most homebuyers to purchase a home anywhere in a given city due to supply and demand
  • the closing of a particular business
  • the opening of a particular business
  • Walmart coming into town
  • Chain businesses setting up (in fact, many point to the emergence of distinctively local, trendy, and unique/boutique businesses as a sign of gentrification)

For the purposes of this analysis, let’s look at how property values, rent, income, and ethnic make-up track over time in Denton by zip code. If Denton was experiencing gentrification in one or more of its neighborhoods, we would expect to see this played out in one or more of these categories. And you’d see it happening in neighborhoods connected to our downtown core.

Daniel Hartley, research economist at the Cleveland Federal Reserve, defines the metrics of gentrification as follows: a neighborhood (census tract) that has “moved from the bottom half of the distribution of home prices in the metropolitan area to the top half” between a given set of years. As we look at the data, let’s look for neighborhoods in Denton that follow a trend similar to this.

Here’s a zip code map of Denton. Pay attention to 76201 – that’s where downtown, our two universities, and their surrounding neighborhoods reside. There have been massive changes and investment in this area over the last ten years with renewed interest in our downtown, so if gentrification is happening in Denton, this is where you would expect to find it:

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PROPERTY VALUES
The following chart shows the trend of property values in Denton since 2007 and compares those trend lines with the average values in the US, in Texas, and for purposes of comparison, a city to the North of us (Sanger), and a city to the South of us (Lewisville).

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Denton is the yellow line. This shows that the rise in property values that we are experiencing in Denton are all part of a trend nationally and Texas specifically. Notice the parallel trend lines of Texas, Denton, Sanger, and Lewisville.  The slope of property values in Denton is not anomalous and therefore not indicative of something particularly problematic for our city.

This is also made clear by the median home sales price per square foot. Consider the following chart comparing Denton to the rest of the country:

Screen Shot 2016-06-27 at 8.15.24 AMBut what do the trend lines look like within Denton? Do we see significant property value changes in certain neighborhoods in Denton signaling gentrification? Do we see what Hartley says to look for – a particular neighborhood going from the bottom of the pack toward the top rapidly? Below are the property value trend lines by zip code in Denton since 1996:

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This chart demonstrates a remarkable stability across Denton’s neighborhoods. While some neighborhoods are more expensive, property values are rising at a consistent rate across the city. The revitalization around the downtown square, train station, and universities (all within 76201 – the bottom line) has not impacted the property values of the surrounding single family neighborhoods in a way that is different from the property value increases across the city. In fact, 76201 continues to be the cheapest place to by a home across the entire city. A fact I find remarkable.

Compare this with a case of actual gentrification in Austin – the ascent of 78702 in East Austin. Look for the dotted line representing that zip code. Notice how it is rapidly ascending from the bottom of the pack toward the middle. That sort of trend-bucking change is a great indicator of gentrification:

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IS THE RENT TOO DAMN HIGH?
Not everyone can or desires to purchase their own home, so rents across our city are another important indicator that might point to gentrification. Let’s first consider how Denton compares nationally, in the state, and with the same cities we used above in the area of single family home rental cost per month:

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Here you see that Denton is above the state and national average, but that it has been that way for a while and the trends lines are roughly parallel to the national, state, and averages found in other cities.

Let’s see how single family home rental rates track across zip codes within Denton since 2010:

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Once again, as we saw with home values, the trend lines are consistent across the city and 76201 – where our downtown neighborhoods reside – continues to be the cheapest place to rent a home in the entire city.

And here’s a chart showing the trend lines for multi-family rental units across zip codes in Denton:

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While 76201 is not the cheapest place to rent an apartment in Denton (it’s the second cheapest), it also isn’t trending abnormally as compared with other parts of town. And this is particularly remarkable given several hundred high end units that have gone in around the square in recent years.

CHANGING ETHNIC DEMOGRAPHICS?
Something else to pay attention to as it relates to gentrification is the changing percentages of ethnicity within key neighborhoods. According to the census, neighborhoods in 76201 continue to become more diverse between 2000 and 2014:


2000 2010 2014
White 74.70% 74% 69.80%
Black 8.80% 12.50% 13.10%
Hispanic 18% 15.70% 18.30%

 

INCOME DATA
Gentrification typically occurs when something triggers a surge of higher income residents into a particular area. Denton, generally speaking, does not have the type of jobs or income characteristics to force rapid gentrification anywhere in the city. Denton’s median household income consistently lags behind the state. And as you see from the below chart, 76201 is well behind that:

2000 2010 2014
Median household Income in 76201 30,231 23,328 23,252
Median household Income in Denton 35,422 NA 43,976
Median household Income in Texas NA NA 51,704

CONCLUSION
A look at every metric associated with gentrification, Denton – and in particular our downtown neighborhoods – show absolutely no sign of such a trend. In fact, when I came on council in 2011 – just after the approval of the Downtown Implementation Plan and at the dawn of the downtown apartment boom – I remarked often how the plan left the downtown single family neighborhoods out of the equation. I argued then (and continue to argue) that the first couple of rings of single family homes around downtown have the most potential to realize a renaissance. But not a renaissance associated with the displacement of poor families and minorities, rather a renaissance of families moving back to neighborhoods that have historically been seen as places for real estate investors to have rental homes for college students. The conversion of downtown neighborhoods from college rentals to owner-occupied homes would be a welcome change.

So much more could be said on this topic and the unique impact of having two growing universities within our downtown core and how that impacts these neighborhoods and what sort of college apartment policy we should have to guide this… But I’ll stop here.

Thoughts?

9 Comments
  1. Patrick Smith says:

    Hi Kevin, thanks for writing this–very timely. I have a few comments to add but will send those tonight.

    One quick correction might be in order. Under Property Values I think you have Sanger and Lewisville reversed regarding north and south.

  2. Happy Birthday! And your still a nerd :-) Be that as it may I agree with your analysis one of the impediments of Single family housing prices Sharply rising in what one might call Gentrification is the small number of houses that would lend themselves to restoration on a grand scale and the number of those homes that have now been converted into make shift apartments.

    I do predict a scraper revolution coming into Denton some time in the next fifteen years when it will happen and where will probably surprise us all. One impediment in doing renovations and any project in Denton is the convoluted and maze like P and Z department. I know that they are working diligently to streamline the process but it is a nightmare for my clients to put up a simple fence let alone do a complete remodel or addition.

    That said Denton is a wonderful place to live and we are all blessed to be in this fine city. Thank you for your service on city council and have a Happy Birthday!

  3. Sonny says:

    Thanks for this, Kevin. EXCELLENT data. (More, please!) Can you share the research tool or resource you used to get these charts?

    Any comment on whether or not gentrification is good, bad, or neutral? If someone assumes that overall economic growth, OR gentrification for that matter, forces some out, what are your thoughts on how would that affect the current growth patterns? If not these current trends, then what would you suggest was a more favorable growth path and outcome?

  4. Devin says:

    Denton’s real estate prices also indicate a shortage of housing, both single family and multi-family. Many houses sell in a few days with several offers, and average time on market is getting shorter while $/sqft goes up every month. We’re now to the point where existing houses in every neighborhood inside of the loop are listing for over $110/sqft. New construction starts at about $115-$120/sqft. If there were more new houses available it would give more options for home buyers, slow down bidding wars, and push down the price of older homes in, ahem, fair condition.

    New apartments may demand the highest rents, but they also create more competition among older and lower amenity complexes, lowering rents in the rest of the market. When occupancy is over 95% and rental availability is at 3% it’s really hard to find another unit to move to, and landlords can raise their rent easily. If occupancy fell by 5% and rental availability got to around 7%, renters could chose better deals more easily and move out of units that price themselves above the market. Occupancy isn’t going to fall 5% by having 1000 apartments and rent houses suddenly be vacated, we need to build new 1000 units of housing so that rentals become more competitive.

    Building more rental units and making rents more competitive also decreases some demand for houses for sale. Right now there are several houses listed in 76201 that could be purchased with 3% down on a 30 year FHA loan that would have payments lower than the house would rent for. Financially savvy renters who don’t really want to buy right now may look at that and see an opportunity to invest in a home and never have their rent increase. If there were more apartments and rent houses available at better prices those people would wait to buy a home.

    Now the question becomes, where do these new units go? They should not destroy the small number of historic neighborhoods and houses that we have. The new housing needs infrastructure to support it and to allow residents easy access to work, school, and entertainment. It should fit cohesively in Denton. Small area plans look like an excellent tool for addressing the infrastructure needs and appropriateness of possible development, hopefully the UNT-area plan will address all of these challenges in south 76201.

  5. Stu Moorhead says:

    Kevin,
    It is refreshing to see an analytical approach to such an emotionally charged subject. I understand that a lot of people are not happy when anything is “not the way it used to be”, and I also enjoy the charm of Denton. However, a lot of the recent off the cuff comments seen in DRC and online that imply the gentrification comments made are factual do our town an injustice. Thanks for adding a level of fact based data to the discussion.

  6. Doug Campbell says:

    Thanks for the research and analysis, Kevin. Do you think that the decrease in median income affects the ability of people to afford rising rents and costs of home ownership, particularly in 76201? I bought a house in 76201 three years ago. My income has not kept up with significant increases in my property tax. It naturally has risen with property value estimates, but unfortunately, my income has not risen to compensate for the rise in cost. Situations like mine may prevent home owners from keeping their homes because their income cannot keep up with costs. Regarding gentrification, is this phenomenon a potential beginning stage of gentrification in a particular zip code? Maybe I am oversimplifying the process.

  7. Greg Johnson says:

    Proof positive that when you remove emotion, agendas & rhetoric to focus on the data, the data doesn’t lie. What a great analysis Kevin. Proof that Denton is moving in the right direction across all demographic lines. You should start a newspaper & report THE FACTS as you did here! Our citizens deserve that.

  8. Patrick says:

    Thank you for the data. You are correct in stating this is not gentrification. But, displacement would be a more appropriate word.

    You gave statistics that show the median household income in 76201 was $23k, but the rent average current on Zillow for 76201 is $1k a month. It is $1,100 for a 2 bedroom. Even with a median income of $44k it is difficult for a person at that rent range.

    You will also notice your income data has not grown as quickly as property taxes or home prices. How is a person who came to Denton that budgeted for current rates supposed to live if taxes and prices outpace their wages. Denton is different in the respect of diversity of incomes, we are students, retail, educators, manufacturing and other things that range wildly on the pay scale of the economy.

    Plus you mention about having more people coming back into the downtown as homeowners. This coin has two sides to it. If we displace the college students into apartments, which are high priced and less bang for the buck we are creating an “urban” landscape where you have a highly concentrated mass of young adults. This creates a place of anxiety, friction and dislocation from the community as a whole. Crime will increase in and around those areas.

    Having students and educators throughout the city and in homes has created an ecosystem of low crime and genuine affinity for the universities in this city.

    With new noise pollution coming in a few years from the power plant, increased traffic, convention center, Rayzor Ranch and turning the downtown into a night club. It seems like Denton is searching for its identity. But for those of us who have lived here for a while we knew it already had one. Your statistics show Comparisons to other communities or buckets of information, but Denton should never be in competition with others. Since what works for one city does not work for another.

    Thanks

  9. Jane Torrie says:

    Thank you for the detailed analysis.

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