By Jennifer Conrad, Managing Editor
Since the pandemic, rent in the Valley has skyrocketed, making affordable housing seem like an elusive dream. Even as rents begin to level off from their peak, the struggle to find affordable living spaces remains a significant challenge for many Arizonans. Let’s examine the current state of our housing market, legislative efforts to address the crisis, and what the future might hold for Phoenix’s housing landscape.
The Multifamily Market in Phoenix
If you’re wondering about the multifamily market in Phoenix, it’s currently sitting at about 92% occupancy, a notable drop from nearly 98% in the immediate post-COVID period. This decline is mainly due to a surge in new multifamily units finally hitting the market. After the 2008 recession, new construction came to a halt, but in recent years, we’ve seen a return to more typical building levels, which is great news for renters as it means more competition and slightly lower rents.
Why Are Rents Dropping?
The primary reason for the recent drop in rents is the influx of new construction. As more multifamily units become available, occupancy rates decrease, leading to more competitive pricing. Advocates for new construction have long argued that building more units across all price points is crucial for keeping rents manageable and affordable.
Why Affordable Housing Matters
Affordable housing is a critical issue here in Arizona. We’ve long been seen as a cheap state, but maintaining that reputation is becoming increasingly difficult. Rising land costs, limited properties zoned for multifamily use, and lengthy entitlement and construction processes contribute to the affordability crisis. Everything involved in developing and managing apartment communities has increased in cost, mirroring the inflation that has affected household budgets.
Roadblocks to New Construction
One of the biggest obstacles to new construction is the need for more multifamily-zoned land. Much of it has been developed or is currently in the construction pipeline. The “Not In My Backyard” (NIMBY) movement also plays a significant role, often opposing multifamily projects over concerns about crime, traffic, and school crowding—concerns that studies have repeatedly shown to be unfounded. This opposition can significantly slow down the entitlement process, which now takes two to four years compared to the previous six to twelve months.
The Extended Entitlement Process
The extended entitlement process results from various factors, including inadequate municipal staffing and substantial NIMBY opposition. More meetings and negotiations between neighborhoods and developers mean more delays. Most new projects require rezoning or entitlement, providing NIMBYs with ample opportunities to stall construction further.
Exploring Legislative Solutions
Legislative solutions are being explored to tackle these challenges. For instance, House Bill 2297 allows converting commercial buildings to multifamily units, potentially adding 150,000 units without rezoning or entitlements. This bill aims to utilize underutilized or blighted commercial properties for housing, with protections for historic neighborhoods and affordable housing requirements.
Similarly, Senate Bill 1162 mandates cities to conduct housing needs studies, examining current and anticipated population growth and housing shortages. To streamline the process, it also requires rezoning applications to be decided within 180 days.
The Legislature’s Role
While planning and zoning are local issues, the state legislature has stepped in to address the affordability crisis. Recent bills aim to create consistency between cities and proactively address housing needs. The legislature’s involvement reflects growing frustration with municipal inaction and a desire for broader solutions.
Eviction Rates and Media Perception
Yes, eviction rates have risen in the Valley, but it’s essential to understand the context. Arizona’s growing population naturally leads to higher eviction filings, but eviction rates have decreased on a per capita basis. Media reports often conflate filings with actual evictions, overlooking the nuance that not all filings result in tenants being evicted.
Luxury Apartments vs. Workforce Housing
While more apartments are being built, many fall into the luxury category due to high development costs and regulatory hurdles. Building middle-income housing is challenging, as planning and zoning commissions often require developers to include costly amenities, making it difficult to create affordable units.
