If cities don’t solve metro Phoenix’s housing crisis, everyone will pay

Opinion: Metro Phoenix has too few homes to meet demand, which is shooting up the price to buy or rent – at the risk of our economy and our quality of life.


The conversation is happening on sidelines at soccer games. In classrooms at Arizona State University. Among friends and relatives who are increasingly desperate to find affordable places to live. Between parents and their millennial children who have good paying jobs. In heartbreaking stories of evictions and displacements featured in this very newspaper.


Arizona’s housing shortage and unprecedented cost increases have collided to hurt many Arizona residents of all ages and incomes. COVID-19 turned the faucet on net population growth in Maricopa County with 86,820 new residents, more than any other U.S. county. It’s clear the solution lies at the local level with swift approval of more quality housing across the price spectrum and throughout the Valley.


It’s really that simple.


We saw the housing crisis coming 2 years ago


But before we cover the solution, we first need to recognize how Arizona wound up in this crisis that I and many of my colleagues in the real estate community, unfortunately, saw brewing at least two years ago.


Over the past few years, a number of elected officials and staff in Valley cities have become increasingly hostile toward housing projects – multifamily projects built for renters in particular.


Angry neighbors spread fear and untruths that more housing projects bring crime and decreased values. Also adding to the situation is 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.


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


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


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


By last year, my colleagues and I were sounding an alarm. We assembled a coalition of Arizona business leaders to talk housing and dubbed ourselves Home Arizona.


We committed to the shared responsibility to pass on to future generations the opportunity we inherited – specifically to live and prosper 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 aligned with the empirical data.


The problem was even worse than we thought.


In fact, Pollack said, “I’ve been doing this work since 1969, and this is worst housing supply/demand imbalance I’ve ever seen. We’re at the precipice 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 increase the customer base for our small businesses. We simply must increase supply or it’s all downhill from here.”


There are shortages at all prices, housing types


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 plummeted to 240,000 units even though Greater Phoenix attracts roughly 90,000 new residents every year.
  • The current shortage is in all housing types, at all price levels, and all income levels. It’s particularly problematic for renters. Greater Phoenix is 15,000 apartments short, today, to accommodate current residents and anticipated growth this year alone. Arizona’s rental vacancy rate is the lowest it’s been this century (4.7%) meaning renters are competing for a shortage of available units.
  • There are more adults (18-29 years old) living with a parent today (46%) than at any time in American history sans one exception – following the Great Depression.
  • Prices in Arizona are increasing at a rate we’ve never seen. Rents today are roughly 30% higher than they were one year ago. This is Economics 101 – a shortage of supply and increasing demand leads to higher costs.
  • In real dollars, the average rent in Greater Phoenix was $1,034 in 2017. Today, it’s $1,537. Five years from now, it’s expected to be $2,475 if the cities continue to turn down housing projects and this widespread scarcity continues.

Which brings me to our solution.


Some cities get it. Others should follow their lead


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


It’s a boon to land a new employer like Amazon or Nike, and these cities recognize that a major consideration in corporate relocation and expansion includes housing.


Other cities need to follow their lead.


And all cities need to take a close look at ways to improve processes and cut bureaucracy.


The simple data show the net population growth isn’t going to slow down. And while developers don’t create the demand for housing, they are trying to react and yet are facing various political, planning and construction cost roadblocks that magnify the problem.


8 ways to increase our housing supply


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


  1. Ensuring that cities do not discriminate against renters through zoning, moratoriums or policy.
  2. Reducing the time to zone a property without harming input from all stakeholders.
  3. Reducing the time to permit properties without harming health and safety issues.
  4. Reducing the time for inspections without harming health and safety.
  5. Addressing affordable housing and housing discrimination.
  6. Creating a benchmark study that measures the number of units each city has in its general plan, and the amount of units it would need to zone and permit each year to meet the forward demand.
  7. Understand that density along transportation corridors is a positive solution.
  8. Creating a housing advocate in cities to push 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 stand in opposition of state intervention and are confident that with bold leadership, cities are up to the task of solving this housing crisis.


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


We need more housing. We need it now. And cities are in the best position to deliver it.


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 throughout Metro Phoenix. For more information go to www.HomeArizona.com.


SOURCE: azcentral.com

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