National opinion: Arizona's housing headache hits home for realtors

Known for its fabulous weather, panoramic desert landscapes, and vibrant economy, Arizona is growing quickly, and residents aren’t surprised. They are, however, feeling the cost of sharing the wide west with so many new neighbors as housing supply dwindles and prices soar. In the bustling hub of Arizona’s real estate scene, brokers are feeling the squeeze as the housing crisis transforms from a market challenge to a direct threat to their livelihoods.

A recent study from Redfin shows that home prices in Arizona were up 5.0% year-over-year in December 2023. At the same time, the number of homes sold fell 7.3% and the number of homes for sale fell 13.1%. These figures underscore a critical issue: a shortage of affordable homes compounded by restrictive housing policies. The growing disparity between demand and supply propels prices upward, intensifying competition among real estate brokers and jeopardizing their livelihoods.

When I spoke with John Karadsheh, Owner and Designated Broker at Arizona real estate firm KOR Properties, he explained that the state’s shortage isn’t a recent phenomenon. “We’ve needed to build more homes the past 20 years, and we haven’t been able to keep up with the demand,” he said. He cited Maricopa County as an example where, for the market to be balanced, there should be between 18,000-20,000 single-family homes for sale; right now there are about 8,900. With fewer homes available, real estate professionals face escalating competition, prompting many, especially part-time practitioners, to forgo license renewals.

In 2022, the Arizona Department of Housing estimated that Arizona needs 270,000 housing units to meet state-wide demand. With current zoning laws dictating property coexistence throughout cities and impeding new housing construction, it will be impossible to meet this demand without significant policy reform.

A report from Arizona State University’s Morrison Institute for Public Policy explains how modifying existing zoning codes can help increase the production of housing. One effective method is to make development “by-right,” eliminating the need for additional approvals in specific locations. This minimizes barriers for developers, reducing project costs and expediting production.

During the last legislative session, a bipartisan group of state lawmakers presented a comprehensive set of bills aimed at doing just this. Senate Bill 1117, designed to tackle Arizona’s housing crisis, sought to revolutionize oversight of zoning laws in cities, streamlining bureaucratic hurdles to facilitate increased housing development.

Unfortunately, lawmakers killed this bill primarily due to opposition from the Arizona League of Cities and Towns. While disheartening, the move is no surprise. Despite receiving bipartisan support at the state level, zoning reforms often encounter staunch resistance from municipal entities and local governing boards who fear that reforms might infringe upon their authority in making pivotal zoning decisions.

Maintaining this rigid ‘Not in My Backyard’ (NIMBY) stance in Arizona not only hampers the state’s growth but also undermines the livelihoods of real estate brokers, many of whom are forced to abandon the profession altogether. The current regulatory landscape constrains their ability to meet the demand for housing, stifling their potential for sales and income. Arizona’s identity as a land of opportunity hinges on proactive measures to address the housing shortage. Collaboration between policymakers, housing advocates, and builders in this legislative session is not just desirable—it’s essential.

Arizona’s future hinges on its ability to confront this challenge head-on. By building its way out of this crisis, the Grand Canyon State can chart a course toward a prosperous future, benefiting both residents and real estate professionals alike.