By Corinne Murdock |
Home builders are warning that Gov. Katie Hobbs’ moratorium on home building will hurt the state’s economy severely.
The Home Builders Association of Central Arizona (HBACA) cited a recent study by Elliott Pollack, a Scottsdale-based real estate and economic consulting firm.
“From an economic perspective, the sudden and drastic measures announcing no new certifications of assured water supply from groundwater created uncertainty and risk, an effective deterrent to potential investors in our state’s economy,” read the study. “The prevailing sentiment that Arizona is out of water is now a significant hurdle that requires educating all future potential investment in our State.”
The study projected that the governor’s moratorium on new builds, imposed last June by ceasing certifications of assured water supply, could cost the Phoenix area over 26,000 jobs over the next decade. That, along with a projection that the moratorium would exacerbate the state’s affordable housing crisis.
Hobbs issued the moratorium in response to an Arizona Department of Water Resources (ADWR) report projecting a 100-year deficit of four percent in groundwater for the greater Phoenix area.
Assured water supply requires demonstration that developers have a plan to use groundwater in compliance with water management rules set by the ADWR and facilitated by the Central Arizona Groundwater Replenishment District (CAGRD).
After ADWR allowed CAGRD membership to meet the renewable water management obligations in 1995, an estimated 460,000 homes were built, bringing in over 1.2 million residents. CAGRD’s existence ensured that water providers and landowners wouldn’t be on the hook for assuring the 100-year renewable water supply up front.
After the ADWR rule change concerning CAGRD, Elliott Pollack reported that the state brought in $50.4 billion in wages and $135.7 billion in economic impact. CAGRD region residents also spent over $180 billion in the local economy, and contributed over $35 billion in tax revenues.
According to a long-term forecast by the Maricopa Association of Governments (MAG), one out of seven newly built homes would be in Buckeye by 2030, with an estimated 14 percent of new builds cropping up in the city through 2060. That’s up to 3,700 new builds annually on average. However, Elliott Pollack said that this long-term forecast wouldn’t come to fruition under Hobbs’ moratorium — meaning, the expectation of the economy-boosting annual influx of around 10,000 new residents wouldn’t occur.
The study further projected the moratorium could cause mass out-of-state migration by escalating home prices in formerly affordable housing regions, with the supply of homes under $400,000 dwindling or ceasing to exist altogether. The median home price in Arizona sits at around $434,000.
Mortgage rates would demand a minimal income of about $100,000 to afford a $400,000 home. Census data estimated that around 40 percent of the greater Phoenix area’s population made $100,000 or more as of 2022, and further estimated median household income to be about $72,000.
That means about 60 percent of the area wouldn’t be able to afford a home in the area.
The study also found that most out-of-state migration from Arizona was to cities with more affordable homes. Out of nearly 30 cities analyzed, 25 had median home prices more affordable than Arizona’s.
Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to corinne@azfreenews.com.
