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Does metro Phoenix still have starter homes? This realtor says yes

A bipartisan coalition of state lawmakers on Tuesday called on Gov. Katie Hobbs to sign a bill known as the Arizona Starter Homes Act.

Among other provisions, it would prevent cities and towns from requiring a minimum lot size of more than 1,500 square feet in an area zoned for single-family homes. There are also restrictions on cities and towns setting some rules on houses being set back from the front or back of a lot.

Supporters argue the measure would bring down the prices of houses and allow more Arizona renters to become home buyers. But critics, including the League of Arizona Cities and Towns, say it would preclude city and town leadership from making decisions based on what residents want.

Some critics also worry the bill wouldn’t make homes more affordable.

Gov. Hobbs, for her part, has not said what she’ll do. She has until Monday to sign the bill, veto it or let it become law without a signature.

Housing has been one of the biggest topics of discussion at the state Capitol over the past couple of years, and the conversation about this bill got The Show thinking about the concept of starter homes and what they look like in 2024.

Lauren Schellhase, a realtor with Home Smart in Phoenix, joined The Show talk about it.

Interview highlights

What does starter home mean today?

LAUREN SCHELLHASE: I really feel like it can mean a lot of things, but generally I feel like it's probably something a little bit smaller, maybe something that might need a little bit of work, or is under a certain price point, something along those lines. But I do think that it has shifted to, it's really just whatever you have the money to afford.

Do you find that there are people still looking to buy sort of the traditional small starter home to live in for a few years?

SCHELLHASE: I think it depends on their situation, because I do have people that are looking for homes that are not in, you know, a permanent relationship, and they want to own a home, and they don't want to wait for that to come along. So, in that sense, yes. But I still think that the sort of typical three-bedroom, maybe two-bath kind of thing is where most people start if they're not, if they're looking for a home versus a condo maybe, or something like that.

And what kind of price point are those houses at these days?

SCHELLHASE: I mean, depending on the square footage, I think, probably high [$300,00], low [$400,000]. But it also, I think completely depends on whether or not you're looking at a new build or resale.

And that's a lot of money for something that, you know, people who haven't bought a home before, maybe, and are not looking to stay for a super long time.

SCHELLHASE: It can be. The way that I do my business, I always tell my people, I want to make sure that you talk to a lender or a money person and those numbers make sense for you. Because markets are cyclical, they go up and down. So if something does happen, do these numbers work for you? You're comfortable with them. Get that figured out first and then go from there.

What do people tend to be looking for in these starter homes? Do people want the stainless steel appliances and the granite countertops and like everything we see on those HGTV shows?

SCHELLHASE: I think can exacerbate certain things. But I think people just want the house to be structurally sound. They want the floor plan to make sense for them. There's been a huge shift in needing extra space within the home, because so many more people are working from home now and post-COVID. A lot of people have taken on pets as companions because they are home so much. So a yard is a much larger consideration than it was I think before. Things like that everybody wants to have nice finishes. Everybody wants, you know, sleek things and cohesive ceiling fans and lighting and things like that. But like I said, it all comes down to the numbers. And if you can afford that, that's incredible. But if you can't, there are things that you probably have to cave on.

Have you had the experience where buyers are maybe a little unrealistic about what they can expect for what they can afford?

SCHELLHASE: Yes, that's, that happens. But that has actually been the case. I've been a realtor for 12 years, and I think that regardless of where the market is that, that tends to be the case from time to time.

Are you finding also that people are looking to buy a house sort of get into homeownership, but they recognize early on that this is not their forever house? It's a place to get their foot in the door literally. And then maybe get more space or move up after some amount of time?

SCHELLHASE: I think right now is such an interesting time in that way, because so many people took advantage of the 2% and 3% interest rates when they were here that typically what, you know, in a normal spring season — where they might sell because it's been a few years and they want to upgrade or get more square footage or something like that — they're not willing to trade that interest rate for what interest rates are now. And I, I think people, they didn't plan to stay there that long necessarily. But the numbers don't make sense for them to leave. So they're in these homes much longer than their original intent.

Are you finding that there are people who would like to get into a starter home but can't afford even that?

SCHELLHASE: I hear that very regularly right now. That's a subject that I'm super curious about, and when I talk to my friends about it, it's things like, you know, I understand that I could buy a starter home maybe in one of the outer cities. But I am not willing to give up my proximity to central Phoenix or, you know, the school district, my children are already in, or something to that effect. And people don't like, for example, they could purchase a home maybe in the area that they want to be in at the prices that they're selling at. But they would have to give up all the other aspects of their life where they have free money to spend. So essentially making them house poor. All they get to do is make that house payment. But then they better enjoy that house because they stay home a lot.

Are there new homes being built that you would classify as sort of a traditional starter home?

SCHELLHASE: Absolutely. I actually just put a new build under contract in Goodyear that, you know, builders are offering incentives that just flat out aren't available on normal residential resale. They're covering a substantial portion of the closing costs. They can offer much better rates, things like that. But it depends on if you are willing to trade perhaps living that far out. So there are a lot of moving parts. There are new builds that could definitely be considered starter homes. But it just depends because the ones that get farther and farther toward central Phoenix become more and more expensive.

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Mark Brodie is a co-host of The Show, KJZZ’s locally produced news magazine. Since starting at KJZZ in 2002, Brodie has been a host, reporter and producer, including several years covering the Arizona Legislature, based at the Capitol.