Zoning Reforms Promise More Affordable Homes for Arizona

Despite the bipartisan efforts made by the Arizona Legislature last year to address the homebuilding crisis, the state still grapples with a persistent housing shortage. The high costs for renters and homebuyers continue to create challenges. To combat these issues, legislators have introduced innovative measures such as allowing backyard casitas and authorizing multi-family units in certain areas, aiming to streamline construction approval processes further.

Recently, the Arizona Senate passed the “Starter Homes” legislation, which supports the construction of smaller homes on reduced lot sizes in new developments. Now, it’s imperative that the House endorses its companion bill, HB2371. By facilitating smaller structures, this legislation promises not only to lower construction costs but also to make homeownership accessible for younger generations and first-time buyers.

Looking at other cities, Houston serves as a successful example where reducing minimum lot sizes led to significant cost savings in housing. Homes built under similar conditions in Houston averaged $200,000 less than comparable new constructions. In Arizona, Nogales is also taking steps hoping for comparable outcomes.

The urgency is apparent. In the last seven years, homeownership costs in Arizona surged by 78%, with rents more than doubling during the same timeframe. Approximately 13% of households in the Phoenix area are spending at least half their income on housing, while wages have stagnated against these rising costs.

A study indicates that the soaring housing prices are the leading cause of homelessness, as individuals scramble to rent from a limited housing supply, often outbid by wealthier residents. Over the past seven years, the number of homeless individuals in Arizona has increased by 65%, surpassing the national rise of 40%.

Experts cite local regulations and high construction costs as key factors perpetuating Arizona’s housing shortage. The influx of newcomers from other states further intensifies competition for the existing housing market, leaving long-term residents at a disadvantage.

The “Starter Homes” bill marks a positive initial move, but further legislative action is needed. Expanding the availability of casitas can help alleviate some of the pressure. While the previous legislation allowed for such units in larger cities, counties could see similar benefits. These smaller, affordable units could provide essential housing options for low-income residents and contribute to enhancing property values.

Additionally, the time-consuming permitting processes hinder housing development across the state. Builders incur heavy costs while awaiting approvals, impacting their ability to meet market demands. Legislation such as SB1353 could simplify permitting procedures, expediting home construction. States like California, Montana, and Texas have already enacted similar measures to foster quicker homebuilding.

Research from cities like Minneapolis and Houston evidences that increasing housing supply translates to greater affordability for all residents. This year, Arizona’s Legislature has an opportunity to adopt proven strategies aimed at improving rental affordability, fostering homeownership, and reducing homelessness statewide.

Tushar Kansal is a senior officer with The Pew Charitable Trusts’ housing policy initiative, and Enrique Davis-Mazlum, Ph.D., is the Arizona state director of UnidosUS.