What a Spring we just had, what a year we are having. 2020 will surely be a year none of us will ever forget. Having experienced the Great Recession at the Arizona Department of Housing, I find myself continually comparing this situation with that one, from a housing perspective.
The Great Recession started with a housing crash that wound up impacting the entire economy. During that time we experienced increases in homelessness, evictions, and mortgage foreclosures. Arizona’s housing market, which was one of the hardest hit states in the country, was devastated. It took the better part of a decade to recover. Arizonans at all income levels struggled with the housing situation. Many gainfully employed people walked away from their homes, which had lost so much value, rather than make payments on an underwater mortgage. In some ways, Arizona is still dealing with a “ghost” from the recession, which was the lost inventory that would have been built, if not for the complete standstill of single-family construction for so many years. The loss of nearly a decade of construction activity contributed greatly to today’s tight housing market that has caused housing prices to increase under current demand.
While the COVID-19 situation has had an immediate and devastating impact on the economy and the health of many Arizonans, we are praying the situation will turn around soon. We are hopeful that its impact will be short lived with respect to its impact on housing matters. New home building construction projects continue, with new starts as well. According to a recent article in Builder Magazine, almost half of renters want to buy a home after COVID-19. In the months to come, we expect to see a continued increasing demand for homeownership in Arizona.
On the rental front, new construction projects continue to be built despite the pandemic. The Department just recently announced its 2020 round of Low-Income Housing Tax Credit awards, which will provide financing for 1,022 newly constructed rental units around the state. This year’s competition resulted in almost 11% more units than the 2019 round, with the newly awarded projects capable of housing 184 more people than last year’s awards.
In talking to rental management companies and the owners of affordable rental units financed by the Department, we are finding that the number of renters who are behind in their rent as a result of COVID-19 appears to be a much lower number than what was originally expected.
Arizona was one of only a few states that immediately launched a rental assistance program once the pandemic began resulting in layoffs and business closures. Some states are still working on putting together statewide programs, while many are not contemplating a state organized program, leaving the issue entirely with local governments to address.
The Department continues to work with our local Community Action Agencies who partnered with the State in the roll out of rental assistance this Spring. We look forward to the addition of tens of millions of dollars that will shortly be made available in the most populous areas of the state through local government’s use of federal CARES Act resources. The State’s COVID-19 Rental Eviction Prevention Assistance Program will continue to be available where it is needed, and will be used as a primary resource in many rural areas, as well as bridge assistance where additional federal resources are more readily available.
Government cannot and should not address every housing issue that effects the housing market. We know that in uncertain times like this, housing resources take on added importance and we are working to help where we can.
At the Arizona Department of Housing, we consider ourselves blessed to live in the great state of Arizona, where we continue working, even under these unique conditions, to make Arizona the best place to live, work, and play.
Housing Matters | Summer 2020