When I moved from California to Arizona over two decades ago, one of my primary motivations was the housing market. Not only was the cost to rent my L.A. area apartment barely affordable on a nonprofit salary, but any dream of homeownership was completely out of the question. Arizona offered much better housing choices within reach.
The world has changed a lot over those two decades and Arizona still trumps many states in the area of housing affordability. It is concerning, however, that Arizona’s housing is less affordable in many respects than it was just a few short years ago, which is being driven, in large part, by demand and a lack of supply. This is especially true in the urban areas of the state, as well as a few hot markets in our rural areas.
The rising cost of housing is causing a lot of angst for renters of modest means, as well as renters who aspire to be homeowners. Homeowners who wish to downsize or relocate to another modestly priced home currently have less available options in the current market. Homebuyers aiming to purchase a home in the price range of $300K or less find themselves outbid by companies backed by venture capitalists buying up the state’s entry-level single-family housing stock for rental purposes. Investor driven home buying, which seemed like such a blessing when the foreclosure crises left too many houses empty, now seems like a curse. Real estate professionals are reporting that it is not unusual to show 30-40 homes before a homebuyer is able to obtain a purchase contract in the Phoenix market.
A new catch phrase explains it: we are missing millions of homes. While this seems simplistic, data supports a widely felt belief that home prices and rents are rising faster than wages, and the primary reason is that construction has not kept up with demand. Over the last decade, new home construction literally came to a standstill, and now in the wake of a growing economy, housing starts remain relatively low compared to need and demand.
Housing is a market-driven industry, as it should be. I have said it before, and you will hear me say it over and over again . . . government cannot fix or address every situation, nor should it try. Yet, when government can work as a partner with others to find solutions to impediments, we should strive to do what we can. We are all better off as a society when people are adequately housed.
This summer, the Department will relaunch the Pathway to Purchase down payment assistance program, to assist homebuyers purchase homes in 26 specific zip codes in 12 communities around the state. See our cover story, Homeownership Help: Arizona Department of Housing relaunching Pathway to Purchase Program this summer for more details.
Then later this year, the Department will be working with the Arizona State University, W. P. Carey School of Business, Center for Real Estate Theory and Practice to convene professionals in a myriad of fields, including real estate, housing development, city planning and zoning, manufactured housing builders, and others about ways we can work together to increase Arizona's attainable housing stock for homeownership purposes.
As always, we are working hard on the State level to address some of the state's most difficult housing issues. If you are reading this message, chances are you are working alongside of us and for that we are grateful.