How Arizona's groundwater shortage could increase housing prices
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Last week's water news could have a serious impact on the Valley's already-unaffordable housing market.
Catch up quick: Gov. Katie Hobbs announced last week the Arizona Department of Water Resources (ADWR) will no longer approve new housing subdivisions in the Valley that rely on groundwater.
- Most cities in the Valley have other water supplies and the policy is expected to affect primarily the western and southeastern edges of the metro area.
Why it matters: Arizona already has a housing shortage that's driven home and rental prices to unattainable levels for many.
Threat level: "This impact of climate change will prevent housing supply from catching up with demand … raise housing costs and present leaders with tough decisions to ensure their communities can continue to grow in the face of climate change," Zillow senior economist Orphe Divounguy said in a statement.
The intrigue: About 75% of new housing being built is in the West Valley and Pinal County — the two parts of our region that are most reliant on groundwater, says ASU real estate development professor Mark Stapp.
- The new groundwater regulations will limit the region's ability to sprawl outward, which is how we've typically grown our housing stock.
Yes, but: Hope isn't lost — we just need to shift building to more central parts of the Valley that have assured water supplies, Stapp says.
- This will require denser, taller housing projects across cities like Phoenix, Mesa and Glendale.
What they're saying: "It's a huge opportunity for us to rethink development patterns," Stapp tells Axios Phoenix.
Reality check: Neighborhoods often wage opposition campaigns against multifamily projects, and local leaders — who fear voter retribution — frequently take their side and kill these types of projects.
- Reconfiguring our housing stock and boosting inventory will require bold regional and statewide direction that we have yet to see, Stapp says.
What we're watching: The state controls more than 9 million surface acres of trust land, including significant swaths of land in Valley cities with assured water supplies.
- Stapp encourages leaders to develop some of these areas into housing as a first step to inject more supply into the market.