Report says Arizona needs faster permitting on home construction

A new report highlights the need for faster permitting on home construction in Arizona.

Common Sense Institute says that, even with a recent decline in the overall housing shortage, the state’s housing market continues to face affordability and supply challenges.

“You have very high prices, very high interest rates, and it is the worst affordability crisis arguably in state history,” Glenn Farley, CSI’s director of policy and research, told The Center Square.

According to CSI, the average home price reached $424,800 last year. That’s up $70,000 from before the pandemic. Meanwhile, it now takes an annual income of $109,900 to buy an average house in Arizona.

“The solution here is to permit more units, permit the kinds of units that can be more affordable to first-time buyers,” said Farley. “These are smaller units, multi-family units; smaller, single family on smaller lots. These are the kinds of properties that we need to get approved for construction and then construct it if we want to bring prices down.”

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CSI estimates Arizona is short about 57,000 housing units as of the fourth quarter in 2024. That is down from around 69,000 the previous year, but at the current permitting pace, CSI says it would take more than 13 years to close the gap.

In some areas, it would take much longer. For instance, CSI says it would take Maricopa County 150 years at the current permitting place to fix its housing deficit of around 37,000 units.

“New construction, in a normal, sort of healthy average housing market, is more expensive than existing housing, much like new cars are more expensive than used cars, but that sort of has inverted recently,” said Farley.

“New housing has actually in some markets been cheaper than existing housing. And it has certainly gotten cheaper than new housing was a few years ago, so what builders are basically trying to do is build more housing and build a different kind of product, a more affordable product to kind of backfill for that missing existing housing,” Farley said.

“And the problem is they cannot do that fast enough or at high enough volume to really bring those prices down meaningfully or quickly,” he said.

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