Housing Affordability to be Major Legislative Issue in 2023

NAIOP Arizona CEO Testifies in Committee Hearing
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In response to growing concerns over housing affordability throughout the state, the Arizona legislature created a Housing Supply Study Committee during the 2022 session. The committee consists of select members of the State Senate and House of Representatives, the Director of the Arizona Department of Housing, city mayors, and representatives of housing advocacy groups.

In recent months, the Committee has met and solicited input from industry and subject matter experts in an effort to address Arizona’s housing shortage and to mitigate its causes. The final hearing took place on December 6, 2022 and the committee will issue a report by year-end.

NAIOP Arizona’s President and CEO, Suzanne Kinney, was invited to provide expert testimony on the economic development and business attraction implications of the rising cost of housing and offer solutions to mitigate the problem. 

In summary, housing affordability has historically been an advantage for Greater Phoenix relative to competitor markets. That has changed. Dallas, San Antonio, Las Vegas, Salt Lake City, and Atlanta build multifamily units faster than Greater Phoenix. For example, Dallas has brought three times more units online than Phoenix in 2022. If we don’t provide a steady supply of affordable housing, we risk falling further behind our competitors.

Companies looking to expand into Phoenix are increasingly concerned about where their employees will live. The big announcement of Taiwan Semiconductor’s (TSMC) second-stage investment means that 10,000 direct workers and those employed by suppliers will require housing. There may be several more stages to TSMC’s full build-out.

In addition to TSMC acquiring entire apartment buildings near the factories, their suppliers are looking to Pinal County, particularly Casa Grande for their operations. On top of this, Pinal County is expecting the electric vehicle industry to create 7,800 job opportunities as a result of Lucid and Nikola’s market expansion and another 3,800 from other advanced manufacturers. With new employees flooding the region, the time required to bring new housing units online must be reduced to avoid employees living in temporary housing.

Population growth has exceeded the projections contained in most cities’ general plans, especially given the rapid post-pandemic growth. Cities simply can’t meet the housing demand without accepting denser multifamily development in areas currently zoned for single-family residential.
Rent is a function of basic supply and demand. An increase in new units would restrict the rate of cost increase for renting older units. New units absorb top market Class A demand, allowing older units to remain an affordable option for the workforce.

Greater Phoenix is on the cusp of becoming a true Tier 1 city. We have the benefit of learning from older cities that achieved that status long ago. Those learnings include what NOT to do. DON’T put up artificial barriers to building new housing at all price levels, such as stretching out the zoning process at the city level or requiring costly amenities, large unit sizes and elegant façades for all multifamily projects. DON’T impose complex schemes that have failed elsewhere, such as price controls. DO be realistic that growth is coming, and DO be prepared for it by building now.

Many of the decisions and barriers are at the city level. State legislation can be a tool to incentivize cities to allow more multifamily development by speeding up zoning processes, updating their general plans to meet the new realities of population growth, and approving projects with more density and affordable units.

Watch Suzanne's full testimony below.​