Bipartisan Solutions: Tackling the Ongoing Affordable Housing Crisis

As Arizona faces escalating housing prices, lawmakers at the state Capitol are intensifying efforts toward affordable housing solutions in 2025. Both parties are addressing the growing concern amid a housing crisis that shows no signs of abating.

Republican leaders have linked the housing issue to water supply management. During a recent meeting of the Joint Legislative Ad Hoc Study Committee on Water Security, Republicans expressed discontent with a new rule from the Arizona Department of Water Resources. This rule, known as the Alternative Path to Designation of Assured Water Supply, mandates that housing developers achieve a 25% groundwater offset in addition to meeting the state’s 100-year assured water supply requirement.

“The Department’s 25% groundwater tax will have vast economic and political consequences that will negatively impact the homebuilding industry, the price of water, and the cost of living,” stated Rep. Gail Griffin, R-Hereford, in a news release. Griffin emphasized that this policy shift could substantially increase housing costs for many Arizonans already suffering from soaring prices.

The median home price in Arizona has surged dramatically in the last five years. Data from Redin reveals a jump from $281,000 in November 2019 to approximately $447,000 by November 2024—a nearly 60% increase.

Spencer Kamps, vice president of legislative affairs for the Home Builders Association of Central Arizona, urged lawmakers to expedite new home construction. “Arizona is facing a severe housing crisis,” Kamps said, noting that the demand for homes significantly outpaces the current supply. He added, “These water implications could not have come at a worse time for the Phoenix metro area.”

The Arizona Department of Housing has reported a housing shortage of around 270,000 units as of 2022. More recently, the Common Sense Institute estimated a 65,000 unit shortfall in October 2024, attributing the decrease to dropping demand rather than an increase in supply.

In a resolution passed on December 18, Republicans labeled the new water supply regulation as “illegal” and inconsistent with legislative intent. They contend that it exceeds the Department’s statutory authority.

Representative-elect Kevin Volk, D-Tucson, with experience in real estate development through his company Vivablox, attributed housing challenges to a variety of factors including rising interest rates, increased construction costs, material shortages, and labor issues. “We can’t just have systems that are solely designed for the same exact type of new subdivision development,” he remarked while advocating for streamlined development processes.

As of January 9, no housing bills had been prefiled. However, legislators may reintroduce proposals from the previous year. Governor Katie Hobbs previously vetoed the Arizona Starter Homes Act, which aimed to curtail design regulations imposed by cities with populations over 70,000. Hobbs raised public safety issues as a major reason for her veto, emphasizing concerns from the U.S. Department of Defense and local firefighters.

Should bill sponsors Rep. Leo Biasicucci, R-Lake Havasu City, and Senator-elect Analise Ortiz, D-Phoenix, return to the Legislature, the bill could resurface. Additionally, the Arizona Department of Housing is poised for a sunset review this year, with advocacy groups urging lawmakers to renew the agency.

Housing policy groups, such as the Arizona Housing Coalition, are also lobbying for the renewal of the state’s Affordable Housing Tax Credit program, which is set to expire at the end of 2025. Their agenda includes enabling faith-based organizations to engage in affordable housing development and increased funding for homelessness resources.

Former state Rep. Marcelino Quiñonez sponsored HB2815 in 2024 to prevent municipalities from reviewing faith-based housing projects; however, it did not pass the Senate. Most Republicans opposed HB2815, citing concerns over potential loss of tax-exempt status for churches.

Democratic legislators have proposed alternative solutions such as limiting corporate landlords’ property acquisitions and banning source-of-income discrimination, but these initiatives faced hurdles in previous sessions.