Arizona lawmakers hear dire warning about exploding home prices

Arizona lawmakers hear dire warning about exploding home prices

February 7, 2022 0 By Cole Lauterbach

Arizona’s housing market is at the edge of a cliff of affordability that a local economist said could lead to more homeless and stifle the state’s booming economy.

Elliot Pollack, CEO of the Scottsdale-based economic and real estate consulting firm Elliott D. Pollack and Company, spoke to lawmakers this week in the respective chambers’ commerce committees.

Pollack’s warning was simple: the state’s growing workforce won’t have homes unless Arizona and its local governments do not better facilitate the construction of tens of thousands of new homes annually.

“Crisis is an overused word but when I look at these numbers, I just shake my head and say, ‘Where are people going to live?’ ” Pollack told the Senate Commerce Committee on Tuesday. “To get a month’s supply of single-family homes back to normal, you need another 20-25,000 units. You need another 15,000 apartment units just to get vacancy rates back to what has historically been the norm.”

Home sale prices in Arizona have risen dramatically in recent years. According to Attom Data Solutions, median home sale prices in the Phoenix metropolitan area rose 26% over 2021.

Pollack said the rapid increase in values is pricing many core professions out of the market for homes.

“There are going to be an awful lot of people priced out of housing,” Pollack said. “Fewer buyers will be able to afford the median-priced home and they’ll keep on going down until they can’t afford anything. Fewer people will be owners. More people will be renters. There will be more rentals of single-family units where people double up. There will be more millennials living with mommy and daddy and more parents living with kids. Homes are going to get smaller and more dense. There will be more homelessness.”

The solution, he posited, was to streamline the process of new home construction.

“There is no solution other than building more units,” he said.

Some lawmakers told Pollack about local resistance to multifamily zoning or increased density.

Home Arizona, a pro-housing organization formed in 2021, said adding new affordable housing must happen or the state’s economy will slow.

“Without ample housing for the workforce, we are going to lose our ability to recruit top employers, who bring good, high-paying jobs,” Home Arizona said on its website. “For the employers that are already here, they will lose their ability to recruit and retain top-talent. This isn’t hyperbole. We’ve all watched what has happened in several other previously desirable cities in California, Oregon, Washington and Colorado.”

New legislation filed Wednesday would, if enacted, create uniform statewide zoning rules that sponsors say would make it simpler and faster to build new housing.

“Arizona’s available housing supply hasn’t kept pace with demand, making it harder for Arizona families to find affordable places to live,” said Rep. Steve Kaiser, R-Phoenix. “The single biggest barrier to increasing the housing supply are municipal regulations and restrictive zoning laws which impede growth. Our bill makes the home building process easier and faster to help ensure statewide housing supplies meet rising demand and Arizona families are able to find a home that they can afford.”

Kaiser’s co-sponsor, Rep. César Chávez, D-Phoenix, said the housing shortage is driving people to homelessness.

“Whenever Arizona has been faced by crises, the best and only solution is to step up to the problems with a bipartisan approach,” Chávez said. “Not only will this bi-partisan bill address issues identified through a wide stakeholder process, we will make a historic investment to the Arizona Department of Housing Trust Fund to address homelessness and affordable housing for Arizonans most in need.”

This article was originally posted on Arizona lawmakers hear dire warning about exploding home prices