Affordable Housing Scarce
Low income, high payments in Arizona a problem, report says

April 20, 2004 - They are teachers, clerks, bank tellers, health workers - hundreds of thousands of people whose hard work is the engine of everyday life.

But in Arizona, their hard work often doesn't earn them a decent place to live.

Arizona suffers from a shortage of affordable housing that condemns more than one in 10 households to crowded or substandard living conditions, according to Arizona Affordable Housing Profile, a federal-state report released today.

The report's findings ring true to Antonio Carrasco of Phoenix, who works two jobs to support himself and his 14-year-old daughter. Carrasco, 40, has paid "ridiculous" rent for a small apartment and even lived with his brother to save money for a house. "It's sad when there are working families with several jobs that can't make ends meet."

The U.S. Department of Housing and Urban Development and the Arizona Governor's Office of Housing Development commissioned the yearlong study. Led by long-time Valley economist and developer Elliott Pollack, it is the first statewide effort to inventory Arizona housing.

Its main findings:

• Nearly 226,000 Arizona households, 11.8 percent of the state's total, lack affordable housing.

• The problem is widespread, but those suffering most are those earning less than half of the state's median household income of $52,109.

• A staggering 62 percent of households on Arizona's Native American reservations lack affordable housing.

• Mobile and manufactured homes provide a crucial source of affordable housing outside of Arizona's metropolitan areas. Excluding Maricopa and Pima counties, they account for 29.1 percent of all housing stock.

• The lack of affordable housing for lower-income residents reverberates through the economy, reducing the supply of housing available for moderate-income households.

In Phoenix, for example, the shortage of affordable housing can affect about 31 percent of all city households.

Finding 'decent housing'

"The study puts a solid number behind what a lot of us thought for a long time," said Terry Goddard, a former Phoenix mayor and former Arizona director of HUD.

"A large percentage of people in Arizona are in distress over housing," he said. "They can't pay what it takes to get into decent housing."

Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies, said, "The working poor are having a huge problem finding housing in Arizona and across the country. The economy has been so strong (that) much of the new housing has been expensive."

While the Valley retains its reputation as one of the West's more affordable metropolitan areas, its housing prices have risen twice as fast as income in the past decade.

Resale homes

The median price of a resale house in metropolitan Phoenix is nearly $140,000. It takes an income of more than $50,000 to afford the monthly payment of $1,130.

The average apartment rent is $686 a month, according to apartment researchers Hendricks & Partners. That's more than someone making $25,000 a year can reasonably afford.

Pollack's study, to be released today at a housing conference in Tucson, defines "affordable" as housing that can be rented or purchased for no more than 28 percent of a household's monthly income. For buyers, the study assumes a down payment of 5 percent and a 30-year fixed mortgage at 8.15 percent interest.

"It's the teacher making $35,000. The fireman. The bank teller," Pollack said. His associate, Rick Merritt, notes that these sorts of jobs are growing much faster than others in Arizona.

"(Workers) may be paying more than 30 percent of their income (for housing) and are living in overcrowded or substandard housing or are even on the street," Merritt said.

In Maricopa County, the report says, about 5,800 affordable new single-family homes were sold in 2000, with "affordable" meaning priced below $117,000.

El Mirage, Avondale and Mesa led the county with the greatest share of affordable new-home sales. Cave Creek, Fountain Hills and Tempe recorded the smallest share.

A survey of public officials and housing experts, included in the report, lists barriers to affordable housing as: expensive or limited land, lack of infrastructure, low wages, lack of jobs and zoning.

In Maricopa and Pima counties, the survey also listed development fees, design guidelines, limited government funding and opposition from neighbors as barriers.

"That doesn't mean we should go out and build 226,000 houses that these (lower income) groups can afford," Pollack said. "There should be some new houses built, but there should also be more incentives and help for people to get in the housing that already exists."

Policy options

Among the possible policy options:

• Refocus existing public programs on the affordable housing gap, and increase the state's Housing Trust Fund.

• Help more families qualify for mortgages through education and counseling, new sources of subsided mortgages, public grants to non-profit housing corporations and greater use of donated building materials and volunteer labor.

• Help more families afford rental housing through government subsidy programs.

• Support existing programs calling for mixed-income housing, higher density development and building on existing "infill" land parcels.

• Establish "linkage fees" that require developers of commercial property to also build or fund affordable housing.

• Encourage financial institutions to promote affordable housing through low-interest loans and outreach to low and moderate-income residents.

Habitat for Humanity

Carrasco shows that such programs can work. In January, he was finally able to get into a home he's proud of with the help of non-profit Habitat for Humanity.

The Phoenix Transit worker had to show a two-year history of steady income and that his monthly mortgage payments wouldn't be more than 38 percent of his income.

He now pays $388 a month for his brand new south Phoenix home. "We have a much higher standard of living now."