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Panelists warn housing affordability worsening in Phoenix area; mortgage rates and prices cited
Summary
Economists and panelists at the JLBC Finance Advisory Committee said housing affordability in Greater Phoenix has deteriorated sharply, with median-home buyers needing six-figure incomes under current prices and mortgage rates; panelists urged more housing choice and municipal regulatory changes to improve affordability.
Panelists at the January Finance Advisory Committee meeting said housing affordability has declined substantially in the Phoenix metro and that interest-rate relief alone will not restore affordability.
Danny Court of the Elliott Pollack Company told the panel that a combination of higher prices and higher mortgage rates has pushed the salary required to purchase a median-priced home in Maricopa County to roughly six figures. "We have not seen any retreat in housing prices, and nor do we see much retreat in the cost of obtaining a mortgage," Court said, and he stressed that even if mortgage rates fall to 5 percent, median-price homes would still require household salaries near or above $100,000.
Court reviewed several dynamics: strong in-migration (particularly from higher-cost states such as California), a sustained housing shortage in shelter supply, and a "lock-in" effect from long-term low-rate mortgages where existing homeowners with sub-4 percent loans are reluctant to sell. He noted new-home permitting in Greater Phoenix rose about 19 percent from 2023 levels, approaching 25,000 new homes, but that builders cannot easily deliver large volumes at lower price points inside Maricopa County.
Panelists identified policy and supply responses that could help: increasing the supply of 'missing middle' housing types, municipal regulatory reforms that reduce cost burdens, and expanded product types priced below current medians (including options available in Pinal County). Lorenzo (Board of Regents) and George Hammond (University of Arizona) both stressed the importance of housing policy for sustained population growth; Lorenzo said stabilizing housing affordability would "go a long way" for the state's economy.
The committee did not take action; presenters flagged affordability as a long-term structural issue that will affect the state’s labor market and population growth.
Ending: JLBC will continue to monitor housing data for future forecast updates; the next forecast is scheduled for April.
