Local educator Sarah Ash can’t find a place to rent. She would like to rent a small house for herself and her two teenage daughters, but hasn’t been able to find anything in her budget. When she does find something, she quickly discovers that several others are “in line” ahead of her.
“I was looking at a tiny 1980s townhome that rented for $1,200 a month in 2020. It’s going for $2,000 a month now,” she observes. “Never in my wildest dreams would I have thought that $1,700+ is something I have to consider as ‘affordable.’ I did the rent calculator and, based on my income, I should be spending around $1,350 in rent. That’s just not possible.”
She is not alone. Rents in Southern Arizona have increased some 40% since 2017 while average home prices have increased as much or more. Drastic increases in rents and home prices have led to rising eviction rates and people falling into poverty.
When discussing affordable housing it helps to know how the term “affordable housing” is defined. According to the city’s Housing Affordability Strategy for Tucson (HAST), housing costs are considered affordable when a household can pay the rent or mortgage while having money left over for food, transportation and health care. When a household pays more than 30% of its income on housing-related expenses, they face what’s known as a “housing cost burden.”
Although rents and housing prices have risen dramatically in Southern Arizona, wages have not kept pace. The Bureau of Labor Statistics (BLS) reported that, as of May 2021, workers in the Tucson metro area earned an average (mean) hourly wage of $25.48, fully 9% below the national average of $28.01. In addition, when compared to the nationwide distribution, Tucson-area employment is more highly concentrated in food service as well as office and healthcare support services, occupations that tend to be lower paying than other fields.
As rents and the cost of living rise, people often mention the need for a “living wage,” which is defined as the hourly rate an individual must earn in a full-time job to support themselves and their family. The MIT-developed Living Wage Calculator reports that a household in Pima County with one working adult and two children needs to earn at least $36.30 an hour to meet the “living wage” threshold, a gap of $10.42 an hour from the $25.48 mean hourly wage in the Tucson metro area.
Dr. Brian Mayer, a professor and research in UArizona’s School of Sociology, surveys low-income households each year as part of the Tucson Poverty Project, which aims to study how poverty affects our community.
“We see staggeringly high cost burdens,” Mayer says. “We found that 90% of renters are spending 30% or more on rent and that limits their ability to buy other necessities. Lack of affordable housing pre-dates the pandemic, but the pandemic made it much worse.”
The Census Bureau paints an even more dire picture. In 2020, it calculated Tucson’s poverty rate at nearly 21% — that’s one in five people living in the metro Tucson area. Compare that to cities like Denver or Phoenix, which have poverty levels of 11.7% and 15.6% respectively.
For those on fixed incomes, the situation is even more severe. Dana Vogel (not her real name) contributes toward the monthly rent for her nearly 90-year-old mother and adult, special-needs brother. “They each get Social Security, but it’s not enough,” Vogel remarks. She covers not only the difference between their income and the rent, but also contributes to groceries and other living expenses. “My mother can’t even talk about it without crying.”
“It’s a tricky thing because to someone else, we’re affordable,” says Zach Yentzer, executive director of Tucson Young Professionals, a non-profit group providing connection and community to professionals aged 21-45. “But it’s not affordable to people who make their wages here.”
Affordability has long been a point of pride for Tucsonans, but, as Yentzer points out, there is a limit. “We, as Tucsonans, forgave a lot of things because it was affordable. Things like road quality, cops on the beat, quality public schools. [But] now housing isn’t affordable, so what are we gaining by living here?”
The affordable housing crisis affects everyone, even those not caught in the living wage crunch. When rents and mortgages increase, that’s fewer available dollars to be spent elsewhere in the economy. As the saying goes, “Rent eats first” and all other expenses come after.
Meghan Heddings, director of the nonprofit agency Family Housing Resources, Inc., says that, “…for every $100 dollars that rent increases, we’ll see a 9% increase in homelessness.” With more people forced out of their homes, that’s a greater burden on the city and county’s already stretched thin resources.
There are many proposed solutions in the works, as well as a number of area non-profit organizations stepping up to help, but the reality is the housing affordability gap is a complex issue that could take years — and the fortitude of elected officials at all levels — to address.
How Did We Get Here?
Many folks blame the COVID-19 pandemic for the recent surge in rents and home prices, but the roots of this problem are more complex and go back much farther.
David Godlewski, president of the Southern Arizona Home Builders Association (SAHBA), says that, after a decade of overbuilding in the late ’90s and early 2000s, Southern Arizona saw a decade of underbuilding as a result of the 2008 Great Recession. In fact, the 2010s was the worst decade for new home construction since record keeping for this benchmark began.
The heyday of single-family housing construction in metro Tucson took place in the 1970s, with 21.6% of today’s housing stock built in that decade. Contrast that with the fact that homes built in the 2010s account for a mere 2.5% of housing stock. This stat is even more dramatic when one takes into account the 5.6% increase in population during that same decade. Put simply, population growth far outstripped production of new units.
Multifamily housing fared no better.
“Cities and towns have been reluctant to approve new projects,” notes Courtney Gilstrap LeVinus, president and CEO of the Arizona Multihousing Association. This has driven occupancy rates for apartments up to 97% in some areas. “You have tons of new people moving in and few apartments available or being built. That creates upward pressure on rent.” Add to the mix inflation and the rising costs of construction, labor and materials and you have a perfect storm for rents to increase.
LeVinus says a major problem has been regulation and the so-called “NIMBYs.”
“We need elected officials to not run scared from every neighbor screaming ‘not in my backyard!’ For years, Tucson has made it very difficult to build new projects,” LeVinus asserts.
Speculators looking to cash in on rising rents have added to the already difficult situation. Liz Morales, Housing and Community Development Director at the city of Tucson, says, “Out-of-state corporate investors purchasing multifamily housing to rehab and increasing rents (also) affects affordable housing in Tucson. Housing costs over the last three years have been increasing at significant rates.”
Chris Poirer, Deputy Director of Pima County Development Services, says that despite some areas of progress, Pima County is still recovering from the ’08 recession.
“There’s not enough housing, period. The market drives everything, so when the private sector took a hit in ’08, it took a long time for them to bounce back,” he explains.
“We need(ed) to be ahead [of housing], but we never were.”
Things looked like they might get back on track toward the end of the 2010s. Demand was rising and more construction projects were in the pipeline. “In 2017 and 2018, we got back to a steady, consistent demand,” Godlewski elaborates. “Then we got to 2020.”
The Year the World Shut Down
Faced with working from home and virtual learning for their kids, people looked around their places and decided they wanted bigger — or simply different — surroundings. Thus 2020 also became known as the year home prices and rental rates exploded.
Low mortgage rates, a healthy stock market and, to a lesser degree, stimulus monies from the Fed, fueled an increase in housing demand that hadn’t been seen in years. In 2021, the number of single-family home permits filed in metro Tucson hit 5,700, the first time the region reached that number since 2007. However, labor costs and supply chain issues complicated things and slowed growth of housing inventory.
“We’ve seen skyrocketing materials pricing, supply chain failures and chronic labor shortages,” Godlewski observes. “Land prices also have gone up tremendously. All of these factors make it very difficult for the builders and ultimately the home buyer.”
He added that regulatory issues are a factor, too. “One of the things I’ve heard is that it’s expensive and challenging for all builders.
That, along with all the other factors, make it difficult to supply the market.”
Prepandemic it took about five months to build a home, according to Godlewski.
Today that same home might take 10 months to complete.
It’s also difficult to build new multifamily housing units. “Developing new units is more challenging in Tucson than the Phoenix metropolitan area because of our increased costs of labor and supplies,” comments Liz Morales. “And the lower area median income also has an impact on the viability of projects being developed.”
Public Programs Step into the Gap
The most direct solution to the affordable housing crisis is to increase the number of multifamily and single-family homes in the market. The initial outlook for housing inventory is positive, but it will take time to see the benefits because production cycles can run several months to a couple of years.
Dan Sullivan, Community and Workforce Development Director at Pima County, adds that both the city and county are taking a
proactive stance. “The Board of Supervisors set aside $5 million for affordable housing,” he says. “And the new Affordable Housing Commission is an effort to understand the issue and find a holistic approach. It’s a coordinated response with all municipalities to find a solution for the whole region.”
Both the city of Tucson and the county are updating their comprehensive land use plans.
Carla Blackwell, Development Services Director with Pima County Development Services, says the county is focused not only on new developments, but also infill and an increase in housing density. “Our job as planners and development professionals is to make sure we always have planned land available for housing so we don’t see a tightening of the market.”
This will require changes to zoning codes as well as the elimination of other barriers.
“The zoning code was adopted in 1953,” Chris Poirer explains. “There have been updates here and there, but it’s an old code.”
The city currently owns and operates 1,500 public housing units and 400 affordable units, but there is a very long waitlist. In addition, the Housing Choice Voucher program assists more than 5,000 households; however, its waitlist is closed until 2023.
The city recently reduced restrictions on the construction of guesthouses and casitas, also known as Accessory Dwelling Units (ADUs), and is actively reviewing and updating zoning codes to make infill construction more feasible. It’s considering the reduction or waiver of fees for affordable housing, as well.
The city of Tucson also is looking at modifying existing overlay zoning codes.
The city already has overlay zones in several areas, with the goal of increasing infill development and promoting transitoriented development. Further amendments to broaden the scope of these overlay zones and to facilitate the construction of multifamily dwellings are under consideration.
There have already been a few successes on this front. The Sunshine Mile project was made possible through overlay zoning that included allowances for mixed-use facilities, i.e., residential and commercial entities. Modifications to other zoning codes, however, will take some time.
As Chris Poirer at Pima County points out, “It’s a public process and they do take time. They can be a little tricky.”
In another effort to assist people in finding affordable housing, the Tucson City Council passed the Source of Income Ordinance in September, which makes it illegal for a landlord or property manager to deny an application using a Section 8 housing choice voucher as a source of income. Previously, landlords could deny renters who used the housing vouchers as one of their sources of income. However, the new ordinance does not force landlords to rent to voucher holders or to lower their rents.
Non-Profits Help Where They Can
Tucson has several agencies and non-profit organizations that assist residents in securing affordable housing, but there are limits to their resources and reach.
Family Housing Resources (FHR), a non-profit agency established in 1991, provides housing support and financial education to low- and middle-income families in the Tucson area. “Housing is critical and long-time generational wealth comes from home ownership,” says Meghan Heddings, FHR’s executive director.
FHR owns and manages six multifamily rental properties in Southern Arizona and assists qualified homebuyers with down payments, but there is still the issue of demand outstripping supply.
“For every 100 low-income folks, we may have 25 available properties,” she adds. “We need more investment in the production of affordable housing.”
The Southern Arizona Land Trust (SALT) also offers rental properties to low-income residents. The organization was established in 2008 and originally acquired and rehabilitated distressed properties utilizing grants from the Pima County Industrial Development Authority.
To date, SALT has added 120 homes to its rental portfolio. “Our goal is to provide housing, but there isn’t enough supply,” says Karen Horner, SALT’s executive director. “People need more assistance.”
SAHBA’s David Godlewski says there is reason to be optimistic about the region’s long-term outlook. “Tucson is still a good place for investment,” he asserts. “But it’s important that government looks to find ways to make it easier to build and to try to increase flexibility when it comes to density and height. The name of the game is to increase supply.”
There is no silver bullet to address the affordable housing issue in Southern Arizona. It was many years in the making and will likely take many years to address. But one thing is clear: public and private collaboration is mandatory if this issue is to be addressed. That means elected officials will have to find common ground with developers.
In the meantime, with rising mortgage rates, the region has seen a slow-down in home re-sales, which has translated to lower pricing for single-family homes. However, with inflation and supply chain disruptions, new home construction costs remain high. In addition, with multifamily housing occupancy rates hovering near 100%, the rental market has not seen significant changes.
The bottom line is it’s going to take a long time — and a proactive focus on infill development and new construction — before we see housing become affordable for Tucsonans again.
Meanwhile, Sarah Ash still is hunting for a place for her family. As a teacher, she’s been focused on her job, which requires long hours.
“I’ve been so busy, I haven’t had a chance to look,” she concludes.