Housing

In the last year, housing prices in Phoenix have risen almost 30%. Prices are skyrocketing, and long-time Valley residents are being squeezed out by transplants from California, Chicago, and elsewhere. It couldn’t come at a worse time. Before Covid hit and spurred Arizona’s latest mass in-migration, Phoenix was already some 30,000 – 50,000 units shy of what we need. The biggest areas of need are in low-income affordable and workforce housing, but the entire market is lagging demand.

Given the massive need for new additional workforce and affordable housing, the scope of the problem has long since outgrown the possibility that government will be the solution, or at least the primary solution. We have to break the problem into three component pieces: affordable, workforce, and market housing.

Affordable Housing

 

This is subsidized housing for the extremely poor, and will remain the province of government, because it simply can’t be built cheaply enough to be economically viable for the private sector no matter what we do to reduce costs. That doesn’t mean we shouldn’t seek to bring those costs down and make it easier and cheaper to build – we should, and doing so will help rein in ballooning prices for single family residential units. That said, at a current cost of almost $300,000 per unit, Phoenix will never be able to meet the need for affordable housing, either. And that’s on land we own, in areas that are often blighted and low income. Compare that to some of the nicest, high-end units being built in Scottsdale or along the Camelback Corridor, where developers are spending only a little over half that amount per door and you can easily see why this cost-premium is making it impossible to build enough affordable housing.

(I will elaborate further on this, and what we can do about it, in a future White Paper)

Workforce Housing

 

This is the key area to truly addressing our needs and creating a more livable, equitable city for the future. This is housing for the people who staff all our stores and serve our food, but also for the people who answer our 911 calls, pick us up in an Uber or cab, drive our buses, etc. These are working folks who need a decent place to live in reasonable proximity to the places they work. Conflating this with Affordable Housing is a trap. If we do, and government becomes primarily responsible for building these units, we will never address our problem effectively at any level, because – as noted above – the needs are far, far beyond the capability of government to address. The White Paper mentioned above will detail many of the solutions I believe we need to try, but the key is simply this: we have to make it a lot faster, and a lot cheaper to build housing. And, basically, those two are the same thing. In construction projects, time is money – a very significant amount of money. We have to shorten the timeline for approval and permitting of these projects by at least 50%, possibly 75%. Other than life safety (have to make sure the building isn’t going to fall down or be a fire trap), we do that by getting government out of the way and eliminating every requirement that doesn’t directly affect the safety of future residents. The planning & zoning process must be massively expedited, inspections need to happen far more quickly (and accurately) than they currently are, and superfluous requirements like having an archaeologist onsite for any excavations have to be thrown out the window.

Market Rate

 

This is, obviously, the easiest area to address, and the solutions are very similar to those above. I have spoken with a number of homebuilders and developers over the last year who have stopped investing in Phoenix because our processes are so convoluted, permit costs are higher than any other Valley city, approvals are often delayed for political reasons, and the Mayor and some Council members seem to think that any new project is a good reason to squeeze some benefits for their friends and associates into the deals. It’s all got to stop. We have to focus on building the units we need, stop playing political games, and start making the approval processes a heck of a lot easier and faster, at least in those cases that don’t have significant community opposition.

That last point brings me to another issue that I’ll be expanding on in the future: we cannot be NIMBYs, and we have to fight back against efforts to sabotage future growth. The opposition we’re now seeing to projects across the city is eerily reminiscent of what happened in San Francisco and Los Angeles fifteen years ago – an explosion in growth fueling a backlash that brought new housing development in these and many other cities to a virtual halt. The result is not fewer people, it’s simply more people who don’t have adequate housing, a giant spike in homelessness, lawlessness, and blight. This is not the road we want to go down.

We have to build, but it has to be…

Next: smart growth