Inside Arizona’s Housing Crisis: A Deep Dive Into the Facts

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It’s no secret that Arizona is growing, and with it, the Arizona housing crisis is worsening. According to the U.S. Census, 5 of the 15 fastest-growing cities and towns in the country in 2022 were found in the Grand Canyon state. This rapid growth has put a strain on the housing sector, exacerbating the existing housing crisis. Current estimates suggest the state is short by a staggering 270,000 housing units. In this article, we’ll unravel the complex factors contributing to the housing predicament in the state.

1. The Great Recession: The Genesis of the Crisis

The roots of the Arizona housing crisis can be traced back to the fallout of the Great Recession. The late 2000s saw a severe downturn in the housing market, leading to a significant slowdown in home construction. From 2011 to 2020, only around 240,000 new housing units were built in metro Phoenix.

Despite the decrease in housing production, Arizona continued to draw newcomers, with more than 268,000 people relocating to the state from other parts of the U.S. between 2016 and 2020. This influx, in contrast with the slowed construction pace, contributed to the imbalance between housing demand and supply, catalyzing the housing crisis we observe today.

2. Pandemic-Era Inflation: Exacerbating the Issue

The economic fallout from the COVID-19 pandemic further compounded the Arizona housing crisis. Phoenix, for instance, experienced a drastic 60% surge in the median sale price of homes from April 2020 to May 2022. The median monthly rent followed suit, increasing by 29% from March 2020 to March 2022.

Although prices started to soften somewhat in 2023, they remain prohibitively high for many residents, limiting access to affordable housing and exacerbating homelessness and housing insecurity.

3. The Wage-Inflation Disparity: Deepening the Crisis

Another pressing issue contributing to the crisis is the wage-inflation disparity. In the Phoenix metro area, wages in 2022 saw a mere 5% increase compared to the previous year. On the contrary, the cost of essential goods like food and fuel rose by 8.5%.

This widening gap between wages and inflation has made housing increasingly unaffordable for many Arizonans, pushing more people into precarious housing situations and aggravating the overall Arizona housing crisis.

4. Investors: Depleting the Housing Stock

The role of investors in the housing crisis cannot be understated. In 2021 alone, investors bought up 31% of all single-family homes sold in Arizona. This trend places Arizona second highest in the nation for investor purchases.

These purchases often result in local residents being priced out of starter homes, and cause an increase in rents for suburban families. This investor activity further worsens the housing shortage and hampers efforts to resolve the crisis.

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Acacia Heights offers 78 units of housing for Phoenix seniors over the age of 55

5. Local Policies and Attitudes: Obstacles to Resolution

Local policies and public attitudes present significant challenges to resolving the Arizona housing crisis. Many Arizona cities zone around 50% of their land solely for single-family dwellings. Homeowners—influenced by concerns over crime, traffic, and potential decreases in property values—often support these restrictive policies.

This zoning approach restricts the construction of multi-family buildings, which could be pivotal in increasing the housing supply. A recent attempt to ease some zoning restrictions in cities with over 25,000 people failed to pass the Arizona Senate in March, further complicating efforts to combat the crisis.

The Arizona housing crisis is a multi-faceted issue that requires a concerted effort from stakeholders across the spectrum—from policymakers to housing organizations, and from residents to investors.

Alleviating the Arizona Housing Crisis

The cornerstone of any viable solution must be to increase the affordable housing supply. This can be achieved by providing incentives to real estate developers to construct affordable housing units. Tax breaks, expedited permitting, and subsidies can encourage developers to make profitable investments in affordable housing. Moreover, easing zoning restrictions can make it possible for developers to construct higher-density housing, particularly in urban areas where land is scarce.

Beyond this, policies must be put in place to curb predatory practices in the housing market. A robust tenant rights framework could provide protection against exorbitant rent hikes and illegal evictions, a common issue among the lower-income demographics.

It is also vital to consider non-traditional forms of housing. Encouraging the development of co-housing communities, micro-apartments, and tiny homes can provide affordable alternatives to traditional housing options. Policies that facilitate these types of housing can serve to increase the overall supply and variety of affordable homes.

Similarly, the government could invest in community land trusts. These nonprofit, community-based organizations can help ensure long-term housing affordability by owning the land and leasing it to residents. This effectively takes the cost of land out of the housing equation, thereby reducing the overall cost of housing.

On the demand side, it’s critical to improve financial education and resources. This could entail programs that guide first-time homebuyers through the purchasing process and provide support for down payments and closing costs.

Addressing the Arizona housing crisis requires an all-encompassing approach that looks at supply, demand, and affordability. By integrating these strategies, we can work toward a sustainable solution that ensures every Arizona resident has access to affordable housing.

At FSL, we offer services that are aimed at providing affordable housing options for vulnerable demographics. We also have weatherization programs that help homeowners save on energy costs, making homeownership more sustainable. Additionally, our programs for people with SMI provide supportive housing options to those who need it most. 

 

We want to bring innovation into the way we deliver community-based and in-home services. We are committed to the development of affordable and energy-efficient homes as well as a high level of personalized care in order to provide older adults with the assistance they need in the living situation that is best for them.

About FSL

Established in 1974, FSL is dedicated to providing integrated, customized care for those who need it in the Phoenix area. We offer a wide range of home- and community-based services, including:

These services are designed to enable Arizonans of all ages to live happier, healthier, more independent lives. So, if you or someone you know is struggling to have their needs met, don’t hesitate to contact us and find out how we can help you. And if you’re looking to give back, consider donating or volunteering your time to our mission. We can’t wait to work with you!

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