A Housing Issue We Can’t Afford to Ignore

Article originally posted on HERE on November 9, 2021

After all, Phoenix is the second-fastest-growing city in the country

The lack of affordable housing and the mounting resistance to multifamily housing development is creating serious heartburn in the Valley’s business community — among builders and employers alike — who view it as a risk to healthy economic growth.

It’s been a thorny issue in Scottsdale for a few years now, and that city is getting a reputation as a tough place to launch new apartment or condominium projects due to an unfavorable political climate. Among the fallouts of limited housing options: 80% of the 200,000 people who work in Scottsdale every day live somewhere else, creating traffic congestion and making employee retention difficult, and there is concern that young families are being priced out of the city.

But it’s not limited to Scottsdale. The resistance to multifamily projects is surfacing in many cities in the Valley, from Gilbert and Chandler in the east to Buckeye and Surprise in the west.

The need for more diverse and affordable housing options is becoming apparent with the low supply and record-high prices of single-family homes throughout the Valley. But there is serious opposition to multifamily options, with neighborhood groups — well organized and motivated — creating political pressure in their cities against them.

The Valley now has the highest occupancy rates in multifamily housing units in the past 50 years — more than 97% full. For all practical purposes, that basically means sold out.

With Maricopa County continuing to post rapid population and job growth, the problem is only getting worse.

Economist Elliott Pollack said in a recent forecast that there already is a shortage of 15,000 apartment units in the region, in addition to what’s needed to keep up with population growth. And the growth is going full bore. Phoenix is the second-fastest-growing city in the country, only behind Austin, and is one of the few regions with more jobs now than before the pandemic.

As Valley cities add jobs and people, it’s becoming a challenge to find places for those people to live.

Neighborhood opposition has caused developers to stall or pull out of plans to build multifamily projects in Surprise and Buckeye.

Surprise Mayor Skip Hall said residents have launched petitions to stop the “low-income and high-density” apartments and are spreading misinformation about the projects over social media.

In Gilbert, neighborhood activists are threatening its mayor and council with recall efforts if they approve any more multifamily units. Similar sentiments are putting pressure on city leaders in Chandler.

The demand for multifamily options is fueled by younger renters who want to live within walking distance of where they work and play. It’s a lifestyle issue. And baby boomers who want to downsize from single family homes to smaller rental options are in that mix, too.

Couple the changing demographics with severe supply shortages and something has to give.

Business groups are now starting to organize to make those points clear both to residents and leaders in cities across the Valley, realizing that their voices are being muffled by local neighborhood opponents.

The Phoenix City Council has approved a plan that would call for 50,000 affordable housing units to be built in the city within the next decade. And, while it can’t control many of the costs associated with building multifamily projects, it could ease some of the development standards for commercially zoned land to make that goal more achievable. That would generate some momentum for affordable housing, revitalize commercial corridors without neighborhood pushback and expedite entitlement and site plan approvals, reducing costs to builders.

The Arizona Housing Department is acting, too, assembling a $24.5-million fund for developers to build affordable housing.

Tom Simplot, head of the department, has acknowledged that rapid growth is outpacing the existing housing supply and it is “a serious challenge.”

“Our department’s analysis suggests that Arizona needs an estimated 250,000 new housing units to keep up with demand. And I’m calling on affordable housing developers to apply for this gap financing and move forward with their sorely needed projects,” he wrote.

He said the department is committed to working with local governments and neighborhood groups to overcome their objections to new housing developments.

All this surely will help. But the challenge is becoming a risk to the region’s economy, and it should be a major wakeup call to business and city leaders alike across the Valley.

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