Phoenix hopes its new housing assessment will help residents and elected officials better understand the city’s housing challenges.
The assessment shows Phoenix is short 59,000 rental units for low-income households. Specifically for households at or below 50% of the area median income. For a household of three, that’s about $46,300 annually.
Samantha Keating, Phoenix’s deputy director for housing, told council members that a federal program called Low Income Housing Tax Credits, known as LIHTC, is the main funding mechanism and the state decides how to allocate the funds.
“In recent years, the state has placed a focus on rural projects. Due to this focus, the number of new LIHTC projects in Phoenix continues to be limited,” she said. “In the 2024 LIHTC round, only two of 10 awarded projects were located in Phoenix, despite the city having a large percentage of the state’s population.”
In 2020, city leaders approved a plan with a goal of creating or preserving 50,000 housing units by 2030. As of September 30, the city says 48,391 have been preserved or created, mostly market rate. Here’s the breakdown presented at Tuesday’s City Council meeting:
- Affordable (for low-income) 4,625 created, 6,020 preserved.
- Workforce (for moderate income) 11,228 created.
- Market rate 26,518.
Phoenix expects to add 200,000 households by 2050. Keating said if current income trends continue, Phoenix will see gains of higher income households.
“This can lead to lower income households being increasingly cost burdened or priced out of Phoenix, especially if higher income households continue to occupy rental units that are affordable for lower income households,” she said.
Thanks to support from Bloomberg Associates, Phoenix was able to collect and analyze more recent data since the 2020 housing plan to create a new assessment.
Key takeaways
- Approximately 57% of all subsidized housing units in Maricopa County are located in Phoenix.
- The amount of land in Phoenix that permits multifamily development far surpasses other cities and allows us to accommodate future housing development.
- 20% of Phoenix zoned property permits multifamily development of 4 or more units per lot.
- 64,000 + housing units have been entitled through rezoning actions from March 2019-September 2024, the majority being multifamily units
- 52% of all rental households are cost-burdened, meaning they pay more than 30% of their gross income towards housing costs, which includes rent and utility costs.
- Phoenix’s extremely low- and very low-income renter households have the most limited housing options due to the low level of units with associated affordable rents.
- There is a gap of 59,000 affordable and available units for households at or below 50% of the area median income.
Factors significantly impacting Phoenix’s housing supply include:
- The shortage of housing supply, relative to the demand, is a reason for increased housing prices.
- During the pandemic, Phoenix’s population steadily increased and put additional demand on the already-constrained housing stock, which led to large housing price increases.
- From 2019-2022, median rents increased by 47% and median sales prices increased by 56%.
- As of June 2024, the average median sales price in Phoenix was $440,000. The median home sales price in 2019 was $256,000.
- Current market conditions make it more difficult to purchase a home.
- Short-term rentals and investor purchases, which have contributed to our housing affordability challenges.
The Phoenix Housing Plan includes nine initiatives, including amending zoning ordinances, redeveloping city-owned land with mixed-income housing and enhancing public-private partnerships.
Phoenix faces future financial challenges in its quest to expand housing stock for several reasons, including the end of COVID-19-related federal dollars. Funding through the U.S. Department of Housing and Urban Development varies. The city is also facing a budget shortfall due largely to actions at the state level, including banning cities from collecting sales tax on residential rental units starting Jan. 1, 2025, and a move to a flat income tax, which has reduced revenue to the city.
