Arizona Republic, Various Sources and Pat Hune, Broker, 1st Southwest Realty, July 2019
The short answer is no. The solution is complicated and getting worse every day. Whether buying or renting the greater Phoenix area will soon lose its reputation as having affordable housing. The problem has many factors. They are listed in no particular order of importance, as they are all important.
Baby Boomer Income Cut In Half – Baby Boomers are especially vulnerable because the household income is cut in half when a spouse dies. Even if the home is owned free and clear there may not be enough money for maintenance. Replacing an HVAC unit could cost $6,000 or more if the house needs the electrical upgraded. Baby Boomer renters are also vulnerable due to the increase in rents.
Rents Have Increased Faster Than Incomes – According to the AZ Office of Economic Opportunity the average annual income for 2019 is $51,000. In just the past 12 months the average rental rate increased by 8.1% or about $103 per month. (To give you a comparison point when I worked at Intel my raises averaged about 3% per year. Which resulted in me telling my manager the raise was an insult. But I digress.) Rents have increased about the same rate every year for the past five years. To make matters even worse 87% of the 16,000+ new apartments built over the past two years are “luxury” with rents averaging over $1,000 a month. Adding insult to injury are the investors snapping up older apartment complexes, kicking out the tenants, doing major renovations, slapping a trendy new name on them and increasing the rents.
Mobile Home Parks Disappearing – The average cost to live in a mobile/manufactured home is $618 per month compared to $1,000 and up for an apartment. The mobile homes are typically larger than apartments with 3-4 bedrooms and 1-2 baths. Investors bought more than 50 trailer and other manufactured home parks in 2018. Many of the parks will be turned into more expensive housing like the dreaded luxury high rise apartments.
Cities Can’t Require Developers To Limit Rent Prices or Provide Affordable Housing – Phoenix is encouraging developers to build housing downtown workers can afford by offering a tax break to provide “workforce housing”. A developer near Third and Van Buren streets agreed to reserve 10% of its 354 units for workforce housing in exchange for the tax break. The rents would range from $600 to $1,000 depending on the apartment size. The city owns many vacant lots. They are exploring partnering with local non-profits to build affordable housing.
The City of Tempe is working with Newtown Community Development Corp to build thirteen tiny houses near Jen Tilly Terrace. Construction is planned to be completed by mid-2020. About half the homes would be available to people making less than 80% of the area’s median income which is $46,650 for a two person household.
What happens if Phoenix loses it’s reputation for affordable housing? – The risk of having no affordable housing means employers may look elsewhere when expanding or relocating. This in turn will have a direct impact on the Phoenix economy by limiting growth, reducing the tax base and losing employers with high paying jobs. Affordable housing is an important problem to be solved and one with no easy answers.