Arizona’s affordable housing crunch is worsening
State needs at least 200K more homes to tackle current shortage
Arizona’s affordable housing crunch was heading toward a crisis before the pandemic.
Pandemic-related job losses over the past year have made the situation worse. And while the almost half a billion dollars of rental aid from the late December stimulus will hopefully help many, those funds won’t fix the problem.
Arizona, and particularly metro Phoenix, has a shortage of affordable housing. Rising home prices and rents, coupled with lagging salary increases, have created a gap.
A lot more affordable homes need to be built across the state.
ASU’s Morrison Institute for Public Policy took on the issue, looking at the hurdles and solutions to building the much-needed housing. Its report, “Building Arizona: Constructing a Rental Market that Meets Demand and Serves All Arizonans,” was released last week.
The institute’s research came right after one of Arizona’s oldest housing nonprofits — Trellis — celebrated 45 years of helping people buy and keep their homes.
Both offer ideas about what can be done to ease the state’s affordable housing crisis.
Behind Arizona’s housing crunch
Arizona needs at least 200,000 affordable homes to tackle its current shortage, and some housing advocates say that’s a conservative estimate.
Housing is defined as affordable when households spend less than 30% of their income on rent.
Typically, low-income families earn
80% or less of an area’s median income. A metro Phoenix apartment would be considered “affordable” for those households if rent was below $1,086, according to the Morrison report.
The average rent in metro Phoenix is $1,284, according to the brokerage Colliers International.
Since 2015, the annual household income in the Phoenix area has increased a little more than 13%, to $68,000 from $60,000, according to the latest U.S. Census data.
Metro Phoenix home prices have shot up 65%, according to the Arizona Regional Multiple Listing Service. Valley rents are up 40% since 2015. About 46% of white Arizonans are housing cost-burdened, compared with 51.4% of Blacks and 49.5% of Latinos in the state, according to the Morrison report.
A 2020 Morrison poll suggests that 43% of Arizonans are open to affordable housing development in their neighborhood. But many of the other residents polled aren’t.
Why more affordable housing isn’t getting built
The big reasons behind Arizona’s housing shortage are rising land prices, land-use policy, public resistance and issues with existing programs that are supposed to spur more development, according to the Morrison report.
The average price per acre for land jumped almost 81% between 2012 and 2017, reported Morrison. And prices have continued to climb since then. That increase “makes it easy to see why developers have favored using land to develop lucrative, higher-end apartments,” its report said.
Metro Phoenix has the ninth most stringent land-use regulation in the U.S. that favors single-family construction, according to the Wharton School at the University of Pennsylvania.
Most affordable housing development in Arizona involves rezoning vacant parcels or increasing density on existing developments, and both require votes by city councils. Often these projects spark protests from neighbors and are either delayed or voted down.
HOAs can also be big obstacles to affordable housing because to build in those communities, a developer has to a get majority vote from an association.
Also, inclusionary zoning — city ordinances that require a proportion of new construction to be affordable to low-income people — is prohibited in Arizona.
Morrison found that as a result of these issues, “if affordable housing is built at all, it follows the path of least resistance. This means it is often built in already poor neighborhoods with fewer resources and opportunities, further contributing to residential segregation and concentration of poverty.”
Celebrating homeownership successes
Trellis, which was launched with the help of Phoenix and the Coronado neighborhood in 1975, has helped more than 3,800 people buy their first home in the Valley, including Sha Wanda Brewer, who bought a south Phoenix house four years ago when she was 38.
“It was a dream come true. I am more secure, more settled,” said Brewer during a recent celebration for Trellis. “It’s such a different feeling from renting. I have more peace of mind and more security.”
Trellis, originally called Neighborhood Housing Services, also has helped more than 46,000 families with housing counseling and financial management so they can keep a home or stay in a rental.
“Homeownership creates and sustains excellent schools, thriving business and healthy neighborhoods,” said Patricia Garcia Duarte, CEO of Trellis. “The housing help we offer is good for all income levels.”
Trellis has also built or rehabbed almost 300 homes in the Valley.
Recommendations to ease the crisis
One of Morrison’s recommendations is preserving more existing affordable housing in Arizona. Currently, when older existing complexes are sold, buyers often turn them into pricier rentals.
To keep more apartments affordable, the think tank proposes establishing right-to-purchase ordinances like Denver and Washington, D.C., have launched. Those give tenants the first shot at buying the complex and allows them to pass that right to affordable housing groups or a municipality.
Offering developers more incentives to build less pricey homes is another option. A recommendation is creating a housing accelerator fund like San Francisco started in 2017 that has provided developers $130 million to buy and renovate affordable apartments. The money mostly comes from banks, developers and nonprofits.
Also, a proposed tax credit that has been introduced in the Arizona Legislature could lead to more than “6,000 desperately needed new and affordable housing units” a year, said Joan Serviss, executive director of the Arizona Housing Coalition.
The legislation calls for a state tax credit for at least 50% of the cost of affordable housing projects to spur more construction.
Morrison also suggests getting more emergency assistance to low-income households by appropriating more money to Arizona’s Housing Trust fund. Money from the fund was swept during the Great Depression to offset budget shortfalls. Since then, the funding has been capped at $2.5 million, except in 2019, when it received a one-time allocation of $15 million that was spent within months.
Another suggestion is using federal COVID-19 stimulus money to buy hotels to turn into emergency shelters that later can be turned into affordable rentals like California and Oregon have been doing.
‘A legacy of freedom’
“Homeownership can redefine the economics of a family and redefine more than one generation,” said journalist and commentator Roland Martin during the Trellis event. “Homeownership equates to freedom.”
He told the story of almost losing his Dallas home to foreclosure after racking up $80,000 in health care bills when his appendix burst in the early 2000s. Martin said he spent four years paying off that debt and filed for bankruptcy.
Martin then saved to pay off his home. When his parents decided to retire, they needed to downsize from one small apartment to an even smaller one. He invited them to move into his fourbedroom house, and his sister and her daughter moved in with them later.
“Today, three generations of Martins are living in a house that I almost lost to foreclosure, and they don’t have to pay rent,” he said. “That’s the power of homeownership. You stop handing a landlord money so they can build wealth on the backs of renters.
“We need to change our language about homeownership. It’s about freedom; economic freedom, freedom to make choices to benefit family,” he said. “Homeownership is a legacy of freedom.”