By Tahreem Ashraf
Lorraine Valenzuela’s small white house in downtown Chandler, Arizona, is dwarfed by a large apartment complex going up across the street and flanked on the other side by an upscale bed and breakfast where rents for casitas start at $298 a night.
Her modest home, which she rents for $1,100 a month, is a holdout in Chandler’s red-hot housing market and reflects how difficult it has become for residents to find an affordable place to live.
“The landlords do not have a top off; they think they can charge whatever they want,” said Valenzuela, a hotel worker. She added that she paid $500 a month for her last rental home, on the same street, but was forced to move when it was sold and converted into a wedding venue.
The sky-rocketing cost of housing is one of the biggest challenges faced by Valenzuela and other low-income residents in the Phoenix metropolitan area. Low inventory, a growing population, zoning restrictions that favor single family homes and increased labor costs for new construction are adding pressure to a housing market under extreme stress.
The current housing crunch is in sharp contrast to the development of the Phoenix area since the mid-20th century when its climate and low cost of living attracted new residents, many of them retirees, from other parts of the country. The state thrived as a suburban hub, where the American dream of owning a single-family house was easily attainable.
Liza Kurtz, a research analyst at Morrison Institute of Public Policy at Arizona State University, said the 2008 recession was partly to blame for the region’s current housing shortage. After housing values plummeted in 2008 and the mortgage crisis left homeowners under water, new construction slowed and has not picked up enough to meet the recent growing demand, she said.
“The supply is so low and the demand is so high that it has pushed up the cost of home prices as well as rental prices to really an extreme,” Kurz said.
A growing population is exacerbating the housing situation.
The 2020 Census found Phoenix to be the fastest growing major city in the country. With a population of 1.6 million, it surpassed Philadelphia as the fifth largest city in the U.S. and recorded a growth rate of 11.2 percent over 2010.
The 10 largest cities all grew this past decade, and 8 of the 10 grew at a faster rate this decade compared to the last. pic.twitter.com/qHzF2XRKGk
— U.S. Census Bureau (@uscensusbureau) August 12, 2021
In an effort to increase housing stock, some municipalities in the Phoenix metro area have begun introducing multi-unit buildings, but existing zoning laws, which favor single-family homes, mean the process can be burdensome and involve re-zoning. In Arizona, about 878,000 acres of land is zoned for single-family homes and only 17,000 acres are authorized for apartments, according to the Maricopa County Association of Governments.
Other zoning policies hamper the development of higher-density housing, which would help alleviate shortages. Kurz points to the Private Property Rights Protection Act, which states that if municipal governments change land use and zoning in a way that would lower property values in a neighborhood, they are required to compensate the property owners for their loss.
“It has an enormous chilling effect on a lot of development and zoning tools as municipal governments are worried that they will have to reimburse for the property value loss,” said Kutz.
Developers also experience public opposition to proposed multi-unit housing projects because some residents believe the necessary zoning changes in their neighborhoods will depress property values. The resulting protests often delay projects.
“It is so deeply ingrained that people will really get scared when any sort of density comes in their neighborhood. So, you get a lot of nimbyism and people going to city council and saying we don’t want this in our neighborhood and a lot of times that really hurts people who need affordable housing,” said Ashlee Tziganuk, a research analyst at the Morrison Institute.
To the southeast of Phoenix, the city of Chandler is representative of the emerging housing crisis in the state. It has seen its population increase by 17 percent, since the recent census, and is projected to grow 11 percent by 2030.
Billing itself as the “community of innovation,” Chandler has a history of high-tech job development, which has attracted people from different states adding to its population.
Chandler, too, is experiencing spikes in rent and a housing shortage, exacerbating the affordability issue across the city. According to a city government report on the state of affordable housing in Chandler, sale prices for homes and rental apartments across the economic spectrum are rising. From 2021-2022, the sale price of a three-bedroom house jumped 25 percent, meanwhile, the rental units saw an increase of 17 percent. The average cost for a three-bedroom home is $502,000 and the average monthly rent is $1,880 per unit.
Leah Powell, Chandler’s director of neighborhood resources, said when people at the higher-income end are not able to afford higher prices they start buying and renting homes previously attainable by middle-income residents. This puts added pressure on prices and reduces the inventory of affordable housing.
“We have a supply issue at the very top end of housing,” said Powell. “We have a higher-income population that is pushing the bubble for affordable housing.”
With all the controversy and uncertainty surrounding the housing market, Valenzuela fears she might not be able to hold onto her home, if the rent goes up as it has elsewhere in Chandler.
“They are forcing us to live in cars. We can’t pay rent,” she said. “You can see these places are going up and they are packing them as close and tight as they possibly can to rent out more.”