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Arizona Housing Market Declines

Builders unable to keep up with demand in the face of government interference

By The Center Square, May 1, 2024 1:30 pm

(The Center Square) – A new report is sounding the alarm on Arizona’s housing market.

The report from the Common Sense Institute, a conservative-leaning think tank, says that Arizona is losing the competitiveness that it once had. In addition, the report says that there is a “housing deficit of over 129,000 units” and found that the cost of a home in the Phoenix metropolitan area has gone up by 60% since 2020.

“Arizona’s housing market is standing on a cliff,” Glenn Farley, director of policy and research at the Common Sense Institute, said in a news release on the report. “Without acknowledging our supply issues and making needed policy changes, we risk worsening housing affordability and losing our competitive edge in attracting a skilled workforce.”

On the Housing Competitiveness Index that the institute does nationwide, Arizona went from 84 in 2011 and is now at 61, which has been a decline over the years. According to the report, the index measures “hours to pay the mortgage,” “hours to pay rent,” “housing shortage/surplus,” and “[percentage of] permits of housing deficit/surplus.”

When it comes to what can be done to make housing improvements in Arizona, the think tank suggests that cutting back on certain housing regulations – such as with zoning and permits – could help.

In addition, they said that increasing the supply of homes under $300,000 could help the situation, as well as having more public-private collaboration on the issue.

Specifically, the report notes that even though there could be an “excess supply of homes” that range from $300,000 to $1,000,000 when looking at mortgage capacity for a household, “There are more households with the capacity to purchase homes under $300,000 than the available supply, indicating that more homes in the price range need to be built.”

Housing has been a hot-button issue at the state capitol this legislative session, as Gov. Katie Hobbs has both signed and vetoed housing-related bills.

Most notably, she vetoed the “Arizona Starter Homes Act,” which received some bipartisan support in the legislature, but critics argued it would give the state too much power over municipalities and other local bodies. Proponents of the bill said it would have cut back on regulations in an effort to increase supply and make housing more affordable.

Meanwhile, Hobbs signed a bill that would allow for buildings originally meant for businesses to be used for residential in some cases, the Arizona Capitol Times reported earlier this month.

Axios reported on Tuesday that the governor is also reportedly working with lawmakers and housing stakeholders to try and navigate the issue following her aforementioned veto.

Story by Cameron Arcand

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