As home prices rise, it’s getting harder and harder for first-time homebuyers to find a house.
According to the MAP Housing Market Study, the Tucson Metropolitan Statistical Area (MSA), meaning all of Pima County, had a median home price of $238,900 in 2019.
When compared across 12 western metropolitan areas, Tucson ranked fourth lowest median home price through the end of 2019, but had the second-highest growth rate of median home prices at 7.1%. As of 2018, 62.4% of households in the Tucson region own their home.
“Statistics prove, over time, that the home, your home, is the single biggest wealth building opportunity you have and so it is imperative of us to figure out the American Dream, to buy a home, and how do we make that the most affordable and the most accessible for the number of people who are in it,” said Tucson Association of Realtors CEO Randy Rogers. “Generational wealth is created by this. I mean it’s staggering. The difference between homeowners and non-homeowners, as to wealth that they build as well as wealth that they potentially transfer down to their families.”
However the generational wealth created by owning a home is also maintained by higher wage earners, as housing affordability differs across income groups, with single family housing affordability much better for high income groups than lower income groups, said University of Arizona’s Economic and Business Research Center Director George Hammond.
The U.S. Department of Housing and Urban Development defines affordable housing as housing in which the occupant(s) pays no more than 30% of their income for gross housing costs, including utilities. The MAP regional housing study calculated what housing affordability would look like for different households with varying income across the Tucson MSA based on HUD’s definition.
Based on their calculations, households with two or more members and a higher income are better able to afford a home. With an estimated household income of $80,000 and four household members, the maximum home price would be $232,000. A single parent construction worker with estimated household income of $40,000 would be able to afford a maximum home price of $116,000.
However, the lower income earners with only one household member themselves would be unable to afford the median home price in Pima County. They calculated that a healthcare support worker earning $27,000 a year could afford a maximum home price of $78,300 and a part-time retail worker earning $13,000 could afford a maximum home price of $37,000, about six times lower than the median home price.
“Typically, folks who are minimum wage or on the lower economic spectrum, they rent, and individuals and families on a higher income spectrum, they own, because they recognize that it creates that generational wealth,” said Arizona Housing Coalition Executive Director Joan Serviss. “What happens is we have a lot of our extremely low-income households suffering, because their rent has just gone up too much, and COVID-19 has exacerbated this situation.”
Those lower-income earners may rent due to the lack of housing affordability, but also face greater cost burden than homeowners, meaning those households pay greater than 30% of their income on housing costs, including utilities. According to the MAP housing study, about one-third of households in Tucson are burdened by housing costs. In 2019, Tucson renters were more than two times more burdened by housing costs than homeowners, which is consistent with the state and nation.
n top of that, the lower the income for a renter household, the greater the housing cost burden. Almost 90% of extremely low income rental households are burdened by housing costs and about three quarters are severely burdened, meaning they spend more than half of their income on housing costs and utilities, according to the National Low Income Housing Coalition. This is compared to only 19% of middle income rental households who are burdened by housing costs (and just 1% are are severely burdened).
“Rents are just not keeping up with incomes and wages and so ultimately Arizona can only meet a quarter of our state’s housing needs in terms of rental housing,” said Serviss.
Arizona only has 26 affordable and available rental homes for every 100 extremely low income rental households, according to the National Low Income Housing Coalition. The state has 183,652 extremely low income renter households. In order to afford a two-bedroom rental home in Arizona, someone would need to earn $21.10 an hour; at the current minimum wage, they’d need to work 70 hours per week.
Without affordable homes, people face homelessness, an existing issue in Arizona exacerbated by the pandemic.
“COVID has really shone the spotlight on the importance of home because it’s now a place that we not only find respite from the virus, but it’s often not just our home,” Serviss said. “It’s now our workplace. It’s now for my kids, it’s their jungle gym. It’s basically a respite from the pandemic, but far too often, there’s folks who can’t shelter in place. They’re really struggling and those folks that can’t shelter in place are those folks who are experiencing homelessness.”
Before the pandemic in Arizona, the Arizona Housing Coalition would conduct their annual point-in-time “street and shelter count.” From the last count conducted in January 2020, Serviss said 10,979 individuals were experiencing homeless, either sleeping outside or in a shelter, emergency shelter or transitional housing. In urban communities such as Tucson and Phoenix, Serviss said they are seeing an increase in unsheltered homelesses, with people sleeping in cars or encampments.
“We’re seeing that obviously because there’s just not enough affordable housing supply,” said Serviss. “People often say, ‘Oh that they’re abusing drugs or they have mental illness.’ Oftentimes the real reason is they just cannot afford that first and last month’s rent.”
In order to bridge the gap in affordability, the Arizona Housing Coalition continues to advocate for mainly two things to increase state investment towards housing and homelessness: enacting a state low-income housing tax and the restoration of the Housing Trust Fund.
The State Low Income Housing Tax Credit mirrors the federal program that has been around since the mid ’80s and, Serviss said, “is frankly responsible for about 96% of all the affordable housing in our nation, a wildly successful program.”
She explained the tax credit would be helpful for anybody with Arizona tax liability, like big institutions, organizations and corporations that would take that credit. If implemented, Arizona would join 22 other states that have a state low-income housing tax credit.
“It serves as an additional layer of financing to make affordable housing work, to make it pencil, to make more units become available to be built,” said Serviss. “Construction costs are so expensive right now. We have a lumber shortage and supply shortage on so many different fronts and so if we have a state low income housing tax credit, because you’re not able to charge market rate rent, you still have to build the unit, and so that tax credit helps make that deal work, makes it pencil.”
Using impact analysis from state economist Elliott D. Pollack and Co, the Arizona Housing Coalition expects the tax credit would result in the construction of at least 6,140 additional affordable rental units over six years.
The coalition also hopes to restore the state Housing Trust Fund used to financially support services, such as rental assistance, foreclosure and eviction prevention, construction for affordable housing and emergency housing needs. Until 2010, the sale of unclaimed property made up a large part of the fund’s budget, but recession-era cutbacks capped the Housing Trust Fund at an annual $2.5 million.
“That’s really not a lot of funding to address the housing crisis in our state, and the Housing Trust Fund is a really flexible fund to meet housing challenges,” said Serviss. “Obviously, right now, we’re dealing with this current challenge of the pandemic, but four years ago we didn’t have the pandemic, and yet the Housing Trust Fund was highly responsive to whatever else was going on four years ago or 10 years ago, but it’s not that responsive when it’s capped at $2.5 million.”
At its peak in 2007, the Fund received $40 million and provided housing relief for more than 12,000 households, according to the Arizona Housing Coalition. They hope to restore the fund to its original level of 55% of unclaimed property proceeds.
“That’s why we’re seeing these increases in homelessness. That’s why we’re not having enough affordable housing development supply or stock, because we’re not making the proper investments,” said Serviss.
Joanna Carr, the coalition’s research and policy director, created an Affordable Housing Toolkit with best practices and suggestions for local leaders. At the heart of the suggestions is zoning, Serviss said.
“How can we create more density in what’s typically been a single family residential zoning area? How can we make the building process expedited? How can we waive fees and fines and can we make the housing development process faster and more efficient, because that obviously is going to reduce costs,” said Serviss. “But ultimately it’s our local jurisdictions in our cities and counties that received the majority of the federal funds from HUD, and from Congress when they passed COVID-19 relief packages. It’s our local jurisdiction leaders that are taking these funds and trying to fill in the gaps and put it to where it’s best needed.”
As housing advocates, Serviss said they advocate for how to use those funds, like converting unused hotel, motel and office spaces into permanent housing. Aside from a lack of resources, the biggest challenge they face is community opposition.
“Not everybody wants a shelter or affordable housing development in their community, so we have a lot of ‘Not in my backyard’ NIMBYism,” said Serviss. She argues the developments are much nicer than what people would normally imagine as the “big ugly brown buildings” found in NYC projects.
“We need to lift up the importance of ‘Home’ because ‘Home’ is that foundational support of which you can go to school and access health care, and you can get a job, if you have that safety and stability of home,” she said.
Addressing housing is a way of addressing systemic racism and pandemic will exacerbate the connection between race and housing, Serviss said.
“We’re gonna have a K-shape recovery where our low-wage workers, who are typically workers of color, are going to be more impacted by job loss and then ultimately eviction crisis, eviction impacts,” said Serviss. “If you get evicted, that stays on your record for a while so you’re gonna have that much of a harder time to get into your next apartment. And let’s say you rebound with jobs—we know that workers of color face significant barriers in accessing those employment opportunities (compared to) their white counterparts.”
A renter-versus-owner analysis on the MAP dashboard found that any minority household in the Tucson MSA, consistent with the nation, is less likely to own their home than white households. The report published last year found Black households were the least likely, with 36.3% living in owner-occupied homes, and American Indian and Alaska Native had the second-highest percentage at 56.2% of those living in renter-occupied homes in Tucson.
Despite a lack of census data on the housing cost burden by race and ethnicity, the MAP Housing Market Study found that among all the minority groups in the Tucson MSA, more than half of households have the potential to be burdened by housing costs if they pay a mortgage on their home. When renting, more than half of American Indian/Alaska Native households in the Tucson MSA have the potential to be burdened by housing costs and fewer than half of households in all other race groups have the same potential.
“When we talk about housing, that’s really where we can start addressing some of these imbalances of power with households of color,” said Serviss. “If we invest in housing, we can start to really fix that imbalance. Because then kids can grow up and receive the same kind of educational attainment that white counterparts can, and they have that much more of a leg up. I think oftentimes politicians will think about education, but again, where you live very much impacts your education, what schools you can go to.”