Housing crisis

Phoenix has a housing crisis. Ignoring it will cost us all

The conversation takes place on the sidelines of football matches. In the classrooms of Arizona State University. Among friends and relatives who are increasingly desperate to find affordable housing. Between parents and their millennials who have well-paying jobs. In heartbreaking stories of evictions and displacements featured in that same newspaper.

Arizona’s housing shortage and unprecedented cost increases have plagued many Arizona residents of all ages and incomes. COVID-19 has put the tap on net population growth in Maricopa County with 86,820 new residents, more than any other US county. Clearly the solution lies at the local level with rapid approval of more quality housing across the price range and across the valley.

It really is that simple.

We saw the housing crisis happen 2 years ago

But before we cover the solution, we must first acknowledge how Arizona ended up in this crisis that I and many of my colleagues in the real estate community, sadly, saw brewing at least two years ago.

In recent years, a number of elected officials and staff in towns in the Valley have become increasingly hostile to housing projects, particularly multi-family projects aimed at tenants.

Angry neighbors spread fear and untruths that more housing projects lead to crime and diminished values. Also adding to the situation are an alarming number of cases of elected officials and planning staff in many cities and throughout metro Phoenix who have been downright unwelcoming to future apartment dwellers.

Mayor:Tempe is not affordable for everyone. We are working to change that

It’s important to point out that there are pro-housing cities like Phoenix, Tempe and Goodyear that have taken a more supportive approach and approved a number of quality projects – but they can’t solve the housing shortage on their own. .

These cities have decided to spend their time working hard to ensure that these various housing projects incorporate the design elements that make our cities exciting places to live and work.

If we don’t increase supply, it’s all downhill from here

Last year, my colleagues and I sounded the alarm. We brought together a coalition of Arizona business leaders to talk about housing and called ourselves Home Arizona.

We are committed to sharing the responsibility of passing on to future generations the opportunity we have inherited – especially to live and thrive in the communities where many of us grew up and raised our families.

Our first task was to engage renowned economist Elliott D. Pollack to assess the housing landscape and confirm whether our fears matched the empirical evidence.

The problem was even worse than we thought.

In fact, Pollack said, “I’ve been doing this job since 1969, and it’s the worst imbalance between housing supply and demand I’ve ever seen. We are on the verge of a very serious problem.

This will affect our ability to attract and retain top employers, attract and retain top talent, maintain and improve the quality of life for our residents, and grow our small business customer base. We just have to increase the supply or it’s all downhill from here.

There are shortages at all prices, types of housing

Here are the facts, according to Pollack’s data:

  • In the 2000s, Arizona built 486,000 residential units to accommodate our growing population. In the 2010s, that number dropped to 240,000 units, even though Greater Phoenix attracts about 90,000 new residents each year.
  • The current shortage affects all types of housing, at all price levels and at all income levels. This is particularly problematic for tenants. Greater Phoenix is ​​currently short of 15,000 apartments to accommodate current residents and expected growth this year alone. Arizona’s rental vacancy rate is the lowest this century (4.7%), meaning renters are vying for a shortage of available homes.
  • There are more adults (18-29) living with a parent today (46%) than at any time in American history without one exception – after the Great Depression.
  • Prices in Arizona are rising at an unprecedented rate. Today, rents are about 30% higher than a year ago. It’s economics 101 – a shortage of supply and growing demand leads to higher costs.
  • In real dollars, the average rent in Greater Phoenix was $1,034 in 2017. Today, it’s $1,537. In five years, it is expected to be $2,475 if cities continue to refuse housing projects and this widespread shortage continues.

Which brings me to our solution.

Some cities get it. Others should follow their example

City leaders in Phoenix, Tempe and Goodyear have been thoughtful in their land use decisions. They recognize the link between housing and their goals of economic development and job creation.

It’s a godsend to land a new employer like Amazon or Nike, and these cities recognize that housing is a major consideration in relocating and expanding businesses.

Other cities must follow their example.

And all cities need to look closely at ways to improve processes and reduce bureaucracy.

The simple data shows that net population growth is not going to slow down. And although developers are not creating demand for housing, they are trying to respond and yet face various political, planning and construction cost obstacles that amplify the problem.

8 ways to increase our housing supply

Over the next few months, Home Arizona will meet with local leaders and ask them to adopt policies that will increase housing supply. Options include:

  1. Ensure cities do not discriminate against tenants through zoning, moratoriums or policies.
  2. Reduce the time it takes to zone a property without compromising input from all stakeholders.
  3. Reduce the time it takes to clear properties without harming health and safety issues.
  4. Reduce inspection time without compromising health and safety.
  5. Fight affordable housing and housing discrimination.
  6. Create a baseline study that measures how many units each city has in its master plan, and how many units it would need to zone and license each year to meet future demand.
  7. Understand that density along transportation corridors is a positive solution.
  8. Create housing advocate in cities to lobby for additional units.

Some of these solutions have been discussed at the state level and a bill that eliminates local zoning control has been introduced. We oppose state intervention and believe that with bold leadership, cities are up to the task of solving this housing crisis.

Throughout my real estate career in Arizona, there has been a universal assumption that Arizona will remain accessible and attractive to new businesses and new residents. Without resolving this housing imbalance, we can no longer assume that abundance will continue.

We need more housing. We need it now. And cities are best placed to achieve this.

Michael Lieb co-founded Home Arizona, a pro-housing coalition of Arizona’s top economists, business leaders, policy experts and developers. He has worked in residential and commercial development in the Phoenix metro area. For more information, visit www.HomeArizona.com.