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January 21, 2020

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It's like the question, which came first the chicken or the egg? I think this one is simpler; good wages should be the answer.

Sadly, this country lost the solution when organized labor became something other than a movement. My previous life was buried deep in the fodder of those at the top engorging themselves, while those we represented struggled to get by.

Now as hardly anyone is represented by labor unions, they are virtually nowhere in the equation. Living wage campaigns have taken their place and all too often those $12 to $15 numbers become the ceiling, not the floor.

Retail sales, fast food, service industry and some health care jobs barely provide pay checks to meet basic needs. Jon is spot on yet again as rents drive them into the poor house. Forget ever being able to own your own home.

The answer almost always was; go to college. But is/was it? Hardly. We need workers for every job and the solution is to pay them better for their work. People minimize those poor paying jobs but without them, society as we know it collapses.

With each passing day, as much as i hate politicians who promise us free stuff, Andrew Yang sounds smarter. My fear is he is right as AI and robotics will displace even the most basic of jobs.

Affordable housing is one of those challenges and much like trump's befuddlement over health care, this one too is a hurdle hardly anyone is looking at.

Great analysis of the problem in Az. Unfortunately,this is not a zero sum problem and has not a simple answer.Unfortunately we have a zero sum government in Washington and Az who do not see it that way.

The good news for Phoenix is that there's a huge amount of new housing supply, and much of it is located where you would want it to be: in downtown and along Central Avenue. It's a bit of a mystery to me how this all happened. There's the ongoing economic recovery, of course, along with local factors like downtown ASU and ongoing population growth. Still, I think I must be missing something given the amazing numbers of new apartments. Where is everybody coming from?

The bad news is the cost. $1500 a month for a studio apartment in Phoenix? Wow. But given the inevitable oversupply in the making, this should eventually correct somewhat. Phoenix is apparently the hottest market in the country now, so new construction will continue for the time being. Enjoy it while it lasts.

When I left Phoenix six years ago, I assumed hyper-growth was finished. By contrast, Portland was a very hot market then and now it isn't. Despite the slowdown, rents have been sticky. Landlords are offering a couple free months free rent in exchange for a year's lease but not much else. There are literally thousands of unoccupied new apartments here and thousands more in the pipeline. The telltale signs of a coming crash are everywhere.

Portland passed an ordinance a couple of years ago mandating affordable housing in all new multi-family housing. I believe the figure is something like 20% of all units must be earmarked to those making less than 80% of median income. Developers squawked but those that got their permitting done in time don't have to worry. New future construction, however, should slow significantly, which will serve more as a floor for high rents than a ceiling.

I wonder if there's a backstory here about consortiums like REITs that lure investors with promises of high return. Or possibly something in the Trump tax "reform" is behind this phenomenon. How did apartments become the latest gold rush? I'm scratching my bald head wondering about this because the numbers ultimately don't add up.

I suspect part of the picture lies in the capital markets, which now operate on national and international scales at unprecedented speed and synchronization.

Thus, international money moved into multifamily housing — for years after the crash, this was the only place where investors could get decent yield. So it's not surprising some of it ended up in Phoenix.

With single-family housing, some market failure is at work. Many banks can sit on their foreclosed properties without the hassle of renting them out.

The trend is across the state. It's not just low wages but also people on fixed incomes, Jon.

In Scottsdale as I am sure you have followed we are going to lose 30% of the remaining affordable housing stock via a project called 'Gentry on the Green'...it will make a bike park and 1400 units of 'luxury' housing in trade for the loss of 1800 units.

Meanwhile long term residents who paid the rent on time without housing assistance such as Sect 8 for elders and disabled...have NO WHERE TO GO. Also the developer ColRich, a California transplant has hiked rents more than 10% on existing, long term residents.

(PS You forgot to add in the costs of medical services that are also skyrocketing in the Valley).

The evictions rate for Maricopa County is nationally one of the highest with last reported number around 44,000. Meanwhile the houses in the old middle class neighborhoods are being bought, torn down and huge McMansions plopped on small lots or redos that come in with price tags of a quarter million.

The AZ Housing Coalition came out with estimates that there is a 24/100 ratio on needed low income workforce housing which amounts to a need of 125,000 units. Tucson's ratio is 21/100.

The state legislature as it stands with multifamily housing developers has done nothing to fully restore the Housing Trust or eviction prevention funds lost in the housing crisis.

The housing crisis cost people homes, jobs and then our taxes went to bail out the perpetrators of the subprime scheme. Then a national Congress from 2010 to 2018 who practiced sequestration and made no appropriations for expansion funding for housing vouchers or investment requested over and over again...and they left office after giving the wealthy the biggest tax break of all.

It's bigger than you think. Today about 25% of single family homes lost during that crisis are now in the hands of corporate landlords. The housing crisis is far from over & constitutes the biggest transfer of wealth from the bottom & middle to the top who did not need it

It is stunning to me that a studio rents for a small amount less than my 3-BR house in Willo.

Mossf people are noty rehiring themselves to qualify why think something Imia ain’t affordable and no I’m noty into sex trafficking when’s a fixed income anything to sniff at never in other states do people noty have housing they can’t have when their older

New Times has a hilarious piece on The Stewart. Sad to say, it's a mess: https://www.phoenixnewtimes.com/news/the-stewart-downtown-phoenix-luxury-high-rise-has-problems-11429237

Short version: it's only half rented out, two floors have been reserved for an Airbnb-type operation, there's flagrant security issues with homeless people camping out in various places, and actual tenants are trying to break their leases. The water is foul and the electrical is unreliable. $1500 for a studio apartment is doubly outrageous given the mayhem here.

It's unfortunate that local governments in metro Phoenix have not mandated that every new residential development include a certain percentage of units that are restricted in perpetuity to working low income renters or owners, with annual governmental verification of work and income status and a provision that the rent or value of the unit shall only increase in perpetuity by the annual rate of inflation. There are major externalities when car dependent cities do not contain an adequate amount of low income housing spread throughout the city.

First a simplified take on the faulty median income on which fair market rates are established:

A town of five households
One household makes $150,000
Two make $25,000
Another makes $19,000
The last (social security) makes $12,000

The town total is $231,000 which divided by five equals a 'median income' $46,200.
That's what fair market rents' become based on. It's a gravely flawed and commonly misused aggregate that affects pricing and profit expectations across the economy. This is one of the reasons rents are so high in development as well.

Recently I was sent this article which seems very optimistic but as with anything from the current admin has flaws big enough to put a trumpist hotel in: https://thehill.com/opinion/finance/479354-is-this-the-beginning-of-the-end-for-americas-housing-crisis?fbclid=IwAR3vFd8yhZkm1E3AKOz4SU0FpPmk24sbgKa0p8Unq9Vjz3au1uQuR80_brA
So let's take the optimism expressed in the article spoke of pesky zoning which AZ doesn't much suffer from in general due to laze faire economics...and little problem here. Zoning also means infrastructure planning..water, sewers, power and their maintenance which aren't taken into account. Infrastructure is rarely discussed by investors and falls on the residents via taxation. Infrastructure is not the developers/investors interest.

Next, Opportunity Zones. On top of the HUD rule changes cited. The Scottsdale 'Gentry on the Green' project is in one. These are tax advantages for capital. All of south Scottsdale as well as central Phoenix are in them which spurred this growth in building - without affordability. Further It hasn't worked out well because it produced gentrification and high end infill building...not workforce or low income housing at at all. Think of how the stock market works...investment equals ongoing and higher profits. The pharmaceutical industry shows how those expectations mean prices don't come down. Opportunity Zones are now on the stock market via what is called a 1031 program creating shareholder/landlords...many mouths to feed.

Suggest looking at how 'opportunity zone's work n real time.

The rule changes from HUD amount to free reign but no real planning in the costs to existing communities. Infrastructure costs always come in the form of increasing taxes for existing residents. And these don't come down either.

A little insight: It wasn't 'free market' economics that took us from tenements and rooming houses to the suburbs and sprawl. It was the progressive economics of post WW II.

Here's a little perspective on what home has meant over time in the US:
https://www.citylab.com/equity/2018/02/the-rise-and-fall-of-the-american-sro/553946/?utm_source=fbb&fbclid=IwAR0JTCVA4WSie7dqwOfNkZWSYEtXomrxtoWl6B4kUdkifF9HYeoEcO9MVws

Soluna's comment could best be addressed by Concern Troll. But I'll make an attempt.

Scottsdale wants to be "exclusive," so doesn't want "those people" inside the city limits. This is true of several other suburbs.

Property rights restricts what can be done. Even in liberal Seattle, developers are required to include low-income units **or** pay into a kitty for construction of such units elsewhere, the latter being the path usually taken.

The Arizona Legislature wouldn't allow cities to even require the second option.

You're catching on Jon.

Scottsdale as an HOA? And no planning for the workforce that lives and serves, sends their kids to schools etc.

But let's take that 'median income' device a little further.

Those five households in our little town now have a median income of $46.200.00

Let's say housing costs (to be more realistic) are a third (33%) of their income.

That averages out to an annual rental expenditure anticipated by developers & marketers of
$15,400.00 which becomes a monthly average rent of $1,283.33

But that means that one household is doing A-OK as the median means that their rent is only about 10% of their income.

The next two households? Well...they are at about 60% of income. Strapped.

The last two can't really afford to live in their town. On the way to homelessness.

The median is a falsity and only serves maybe on quarter of the town. The rest of the folks are cut out. And yet that's how rents are being established.

Faulty premises are making a mess. Contempt for the reality of working folks economics - prior to investigation? I think so.

Responding to Soluna, it is highly unlikely that any Phoenix metro local government would venture on its own to mandate that development projects include affordable or workforce housing units, because Arizona has what is known as Proposition 207 or the "Private Property Rights Protection Act" (Ariz. Rev. Stat. 12-1131 through 12-1138) which allows a property owner to seek "just compensation" when he or she believes that application of a "land use law" to his or her property will cause or has caused diminution of its fair market value. Good luck persuading the Arizona Legislature to enact a statute requiring this, because the private property rights lobby is very strong. That being said, what local governments can do, and have done (e.g., Phoenix), is to provide an incentive (such as overall increased density or waiver of development fees) to persuade developers to construct work force housing units as downtown infill. But, even this, can fail when the market for higher end is very strong like now. I personally believe this is good public policy, because we need to provide housing for public servants, teachers, tradespeople, etc., that is closer to where they work, not in "drive to you qualify" land in the far reaches of Maricopa County. I am also intrigued by Oregon's new state law eliminating single-family zoning. I definitely can see some Arizona cities doing this in certain parts of their communities to promote more duplex, triplex, four-plex, etc. development.

Sadly Ellen, the issue is that with current laws/regs in place the 'market' disincentivize realistic rents.

Yes it would take a whole new political compact to move this issue forward. And even AJ and Maricopa city are no longer affordable if you review renter websites.

So yes also, we make commuting great distances are greater and greater burden on low income AZ of which teachers are sadly a part.

And then of course there is sprawl...

Question is: Where is the awareness on most citizens part. And where is the leadership to make AZ's opportunities balanced across the full citizenry?

Uh, I think someone is confusing "median" with "average".

They are different things, and they lead to different numbers.

Median Income for a sequence of $150,000, $25,000, $25,000, $19,000 and $12,0000 is $25,000.

Average Income for the same sequence is the total of the incomes divided by the number of incomes in the sequence or $231,000/5 = $46,200.


And yet-that's how it is figured. Not as a mathmatical process but a manipulation.

Brief note to clarify my prior post. Marketing uses data very differently from statisticians. And this is what I have seen used in calculating rents.
Here in Scottsdale one of the chief bars to accuracy is that there is a great deal of wealth with a very low distribution (number of people holding it) and then a greater number of citizen workers, retirees etc. who are not broken down by population. It skews planning entirely.

Link to census tract verifying median incomes by census tract, I don't think .gov would confuse math terminology.

https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx

Moving to the Desert this spring, greatly lookong forward to it. And we'll try and conserve our long-term water usage.

I apologize upfront for going "off topic".
The current events in Washington should require everyone to read the book, "THE IMPEACHERS by Brenda Wineapple.

It is the story of the impeachment of Andrew Johnson. The parallels to the current events are incredible.

It is not an "easy read", but is well worth the time/

How many affordable housing units in Phoenix have been lost as the result of the GCU expansion?

Continuing the use of the "median income"...I find the census site's data questionalbe. So here is an alternative to take a look at and the numbers here are pretty damnimg. https://www.usnews.com/news/best-states/arizona?fbclid=IwAR0my96GKx8jqX59qO_05v7zjFutBbyEg_Orzgqx06QvgmHm2xOU7MxFZ5w

The interesting thing about affordable housing crises is that ultra-liberal states have been unable to solve them. I haven't really seen many successful solutions anywhere. It may well be that our *expectations* are out of whack with what our economy can achieve, regardless of state politics. Americans tend to occupy many more square feet per person than many other countries, after all, with more appliances, more bathrooms, more amenities.

I suppose if one managed to be pro-affordable housing mandates without asking for any other development restrictions, lower rents might be more achievable, but I rarely meet anyone who favors affordable housing mandates but not any other development restrictions. Therefore, liberal states make development too pricy and limit supply, whilst conservative states have plenty of supply but don't artificially control the market forces of supply and demand.

I should state that I worry about the affordability index as much as anyone. When the percentage of people who can afford housing becomes too low, real-estate crashes come. This was self-evident long before the Great Recession. What I didn't know at the time was how out of whack mortgage lending had become.

I think a housing reset is still a ways away but just as the housing collapse triggered the last Great Recession by exposing the rampant fraud and risk-taking by lenders and banks, another recession could push a lot of over-stretched borrowers into default and spur a housing crisis.

mark just sell the earth bound house and get some bedroom wheels with solar and a generator.

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