10-28-2018 Courtesy, in part, azcentral

Downtown Phoenix’s Metro housing boom is blanketing the area with thousands of new apartments and condominiums.

But the rents and prices for the new homes will shut the door on some who want to live in the area. and home prices in historic neighborhoods in and around downtown Phoenix are soaring as the area becomes more popular, further limiting Metro Phoenix potential buyers.

“It’s heartbreaking that the teachers and those working in the area’s hotels and cafes can’t afford to live in downtown,” said Cindy Dach, downtown Phoenix proponent, resident and business owner. “The area won’t be diverse unless we plan housing for everyone.”

Some affordable housing is planned in the city’s core, but not enough, say housing advocates. Building affordable housing in the area is tough due to rising land prices.

“We need the entire spectrum of housing in downtown Phoenix,” said Patricia Garcia Duarte, CEO of the housing non-profit Trellis. “Many people forget affordable housing is needed to create a healthy community.”

Luxury, luxury and more luxury in Metro Phoenix Phoenix, AZ

Most of the 8,000 apartments recently built, underway or planned in downtown Phoenix are in luxury complexes with rents higher than the average Valley mortgage.

The average apartment rent in downtown Phoenix is $1,608, according to ABI Multifamily. The average apartment rent for a one bedroom for the entire city of Phoenix is $1,050.

Millennial Adrian Zaragoza rented in downtown Phoenix’s Roosevelt Row neighborhood for five years before buying a new condo in the area’s Portland on the Park development last year.

“I saw rents rising, and the chance to buy a condo before those prices climbed too,” he said.

Zaragoza said all of the new development going on downtown “is exciting,” but he’s glad to be his own landlord and not dealing with rent hikes.

If too many apartments go up and don’t fill up fast, rents could fall in downtown Phoenix.

Also, though rents are high in downtown Phoenix, they are still $50 to $100 lower a month than rents in downtown Scottsdale and Tempe.

Can you still find an affordable house In Phoenix, AZ?

Aysia Williams and Benjamin Hughes rented in Phoenix’s Woodland Historic District, on the western edge of downtown, for about a year before trying to buy their first home.

“We fell in love with the area, but saw prices and rents climbing fast,” Williams said. “We knew we wanted to buy, but there was a lot of competition for the houses we liked.”

Woodland is part of the 85007 ZIP code, one of central Phoenix’s more affordable neighborhoods. The area, which has also attracted many investors, saw its overall median home price climb 10 percent to more than $192,000 in 2017. Sales in the area jumped nearly 20 percent last year.

The couple’s house, for which they paid less than $250,000 a few months ago, was never even listed for sale. They were renting in the neighborhood and searching for a home they could afford when they met a longtime homeowner who didn’t want to sell to an investor.

People talk about the gentrification of central Phoenix pricing too many first-time homebuyers out. Buyers can still find affordable homes if they look hard enough.

Home prices in most other historic neighborhoods around downtown Phoenix are much higher. Prices in nearby the nearby Roosevelt historic district and Willo historic neighborhood can easily top $500,000.

Housing downtown workers can afford

Phoenix Housing Director Cindy Stotler said downtown Phoenix has 1,001 affordable units which is more than most people realize.

The issue is that those units are reserved under federal law for “very low-income” individuals who have a median annual income of  $14,000-$38,000.

Stotler said the real downtown housing gap is in “workforce housing,” for middle-income individuals who make $38,000-$48,000 annually. These individuals would have to pay nearly 50 percent of their income to afford living in market-rate housing downtown which is not reasonable or sustainable, she said.

“To me, the area that we’re missing in downtown is the working people’s housing. And people who are not like a lawyer or something and making a lot of money, but they’re just average working people,” she said. “There’s no regular housing for them. We’re not building that.”

To get workforce housing downtown, the city likely won’t be able to rely on traditional developers, Stotler said.

Land prices are high, which makes it difficult for developers to offer middle-income rents and still turn a profit on their projects, she said.

Garcia Duarte said financing is also difficult for more affordable housing, which deters some developers from building it. 

Stotler is looking to city-owned land in downtown as a possible solution to this issue. She hopes to find developers or non-profit groups that may be able to build middle-income housing on these lots.  

Affordable housing to market-rate

Phoenix’s housing department owns and operates three affordable housing properties in the downtown core.

• Deck Park Vista: Located at Third and Moreland streets, Deck Park Vista has 56 subsidized senior apartments. The average household income is $17,848 and only two of the units qualify as workforce housing.
• Ambassador West: This complex located near Van Buren Street and Fifth Avenue has 102 units. The average household income is $24,159 and only 28 of the units qualify as workforce housing.
• Reflections on Portland: This small, 18-unit complex at Second and Portland streets has five workforce housing units. The average household income is $35,245.

Stotler would like to take some of the city’s housing projects and redevelop them as denser projects with more units available for middle-income households.

For example, Deck Park Vista is a garden-style apartment complex with just 56 units on two acres of land. Stotler said she could fit between 200-400 units on the land.

“It’s a poorly designed project for the downtown,” she said.

Stotler said the city has 10 other senior housing options across Phoenix, including some near downtown, like the Warehouse District, where the current residents could be moved to accommodate a new multistory project on the land with 200 workforce units and 50 affordable units.

Financing the project won’t be easy. While the city gets federal assistance to provide low-income housing, there are far fewer resources to build and provide middle-income housing, Stotler said.

“That’s where I’m struggling right now, is where we can get the funding to build all these workforce units,” Stotler said.

Pressure to build affordable In Phoenix, AZ

In most large cities, particularly those on the East Coast, it’s common practice to require developers who build market-rate housing to contribute to an affordable housing trust fund, which allows the city to build affordable housing.

Phoenix can’t do this. State law prohibits cities from creating such trust funds, Stotler said.

Instead, the city council can, and has, put pressure on developers to include a percentage of affordable or workforce housing in its projects if they want special perks from the city like a tax break or extra height.

Recently, the developer of an apartment project planned at the Arizona Center agreed to reserve 10 percent of its 354 planned units for workforce housing in exchange for a tax break.

Whether you’re looking to buy a single-family home in Phoenix, AZ, a Historic Phoenix home, or, If the condo lifestyle is something you’re considering, or, if it’s all you can afford now, please give me a call for  free, no obligation consultation. I specialize and LOVE working with first-time homebuyers and am am FIRM believer that THERE IS NO SUCH THING AS A STUPID QUESTION. I’ll take all the time with you that you need!