Lack of Affordable Housing in Flagstaff, AZ
Contents:
- Curious Observation
- Identification of a Problem
- Outside Research with Annotated Bibliography
- Possible Solutions
- Public Opinion Poll and Data Collected
- Proposed Solutions
Curious Observation:
Housing in Flagstaff is said to be among the most expensive in the state of Arizona. Real Estate is a major economic issue in Arizona (specifically Flagstaff) due to scarcity, the basis of all economic issues. The housing market is on an upturn from where it was a few years ago but it is extremely expensive and hard to finance. The housing market in Flagstaff is extremely inflated since it is very popular to have a second home here, which causes a lack of housing and in turn for the market to suffer for residents of Flagstaff, especially home buyers. Since we have NAU here, which is the biggest it has ever been and is continuing to expand, a lot of young people take up the housing options as well, making it even harder for other residents to find affordable housing options.
One day last semester I was discussing this assignment with one of my teachers (not the one who assigned it) and in passing said that I may do the lack of affordable housing in Flagstaff. He stated that he can hardly afford to live here and is actually moving to Pennsylvania this summer because he cannot afford it. This is a community member who has a master's degree from NAU and is moving to get his doctorate and to teach at UPenn this coming Fall. The idea that respectable and valuable community members cannot even afford to live here convinced me to take on this topic for my project because I believe that this is a real life example of how this issue is affecting our community.
One day last semester I was discussing this assignment with one of my teachers (not the one who assigned it) and in passing said that I may do the lack of affordable housing in Flagstaff. He stated that he can hardly afford to live here and is actually moving to Pennsylvania this summer because he cannot afford it. This is a community member who has a master's degree from NAU and is moving to get his doctorate and to teach at UPenn this coming Fall. The idea that respectable and valuable community members cannot even afford to live here convinced me to take on this topic for my project because I believe that this is a real life example of how this issue is affecting our community.
Identification of a problem
Due to the high cost of living and housing in Flagstaff there is a difficulty in buying and selling real estate and therefore more foreclosures and a market with a less defined "middle class". I knew that it was expensive to live in Flagstaff, but I didn't know if this was a legitimate problem economically that our community is facing, so I asked some real estate brokers in town to explain the issue to me. I sat down with Wayne McCormick, Gary Nelson, and Paula Montofer and they told me that housing in Flagstaff is is expensive but there is a good reasoning as to why this is. They said that living in Flagstaff is worth the cost due to the high quality of life, scenic views, safety and community feeling, and the high opportunity of outdoor activity. We are extremely close to the Grand Canyon and many other state parks , which provide tourism, and you can be hiking on the mountain or in many other scenic places within 15 minutes of any homes within city limits. We also have Arizona Snowbowl which provides a big tourist population as well. They said that it's worth the inflated cost of housing to be able to live in a place with such a high quality of life, and it's an excellent place to raise children. While this is all great, the fact that our living and housing costs are ridiculously high is still the focus, and they did confirm that living here is one of the most expensive places in the state and many Flagstaff residents end up moving away or struggling to stay here because of the cost.
Outside Research with Annotated Bibliography
Kirkpatrick, Ann. "Lack of Affordable Housing in Flagstaff, AZ." Letter Interview. 26 Feb. 2015.
- Ms. Kirkpatrick (our district Representative for Flagstaff) offered insight into why housing is so expensive in Flagstaff. To counteract this, she has supported efforts to raise minimum wage to $10.10/hour. She agreed that housing is among the highest in AZ. she believes that the issue is the combination of high demand of housing/property and low supply due to the lack of ability of expansion. While she is taking steps to solve this issue, there was an underlying point that this is just "the way it is" and that you can only fix the problem to a certain degree.
Arizona Daily Sun. Jan 2015. Web. 26 Nov. 2014
- Median price is up to $328.000 and sales are at 13% (102 homes) in October compared to 90 homes 1 year previously. The economy is improving and interest on mortgages is dropping, so larger houses are selling more. Smaller houses are selling for less than they are worth due to increased desperation and a stuck recession that ceases to improve enough to make a difference. People are buying houses, but they are buying them for lass than they are worth, which is an issue for sellers because they are losing money on their real estate investments, which should be increasing.
"Flagstaff AZ Livability Score" AreaVibes. AreaVibes Inc. Web. 4 May 2015. <http://www.areavibes.com/flagstaff-az/>
- The cost of living index shows Flagstaff being 13% higher than Arizona's average as well as the national average, while our housing cost is 60% higher than Arizona and 43% higher than the national average. Unfortunately, our median household income is 3% lower than Arizona. Having our income lower is an issue because our housing and living costs are so much higher, so the two don't correlate. This shows that people would have to live more frugally here as opposed to the rest of Arizona and this could be a factor in driving people away from moving to our community.
McKernan, Shaun. "Cost of Living in Flagstaff Too High." Letter to the Editor Apr. 2014. Arizona Daily Sun. Web. 4 May 2015.
- In this letter to the editor, he explains that he is a grad student at NAU and fourth generation Flagstaff resident. He works for minimum wage and doesn't even make enough in one year to pay income tax. The cost of living is so high that it's impossible to survive on full time minimum wage and he will be forced to move soon due to the cost. Many students are faced with this issue and end up moving because of it. This is driving a younger population away and encouraging the older, second home population that is devastating our housing market to begin with. It's sad that valuable and respected residents are being forced to leave due to not being able to afford the cost of living.
Neighbors, Gerald. "Lack of Affordable Housing and Solutions." Personal Interview. 25 Mar. 2015.
Overton, Scott. "Lack of Affordable Housing and Solutions." Personal Interview. 31 Mar. 2015.
Possible Solutions
Some solutions that have been proposed to me are more subsidized housing, raising the minimum wage, opportunities to lease the land you build a house on, taxing second home buyers, less citywide regulation, rent caps, more high density developments, repurposing abandoned buildings, and using alternative power sources.
Note: On the public opinion poll that I conducted there was space available to state possible solutions, and although I did get many thoughtful and helpful ideas, many included things like "keep prices low" , "more affordable housing", and "tell rental owners to not be so greedy". As these are not possible because you cannot just lower the cost out of nowhere or tell rental owners to charge less, I did leave these out of the data. These were assumed to be outliers and not helpful to the overall goal of this analysis.
Public Opinion Poll Results
Note: This opinion poll was conducted via this website and spread through social media. It was intended for renters, owners, and past residents of Flagstaff and any data that did not fit that was discarded. It was open to everyone and therefore not skewed because any age, gender, and economic status was used, they just had to have lived here at some point.
There were substantially more women than men to complete the survey.
There were not as many younger people, although we do have a wide range of ages within the data.
Substantially more people believe that it is somewhat to very worth living in Flagstaff compared to the cost.
Ironically, over half of the residents stated that they believe our city council members are not taking appropriate steps to solve the housing issue, although they previously stated it is "definitely worth the cost" to live in Flagstaff.
An overwhelming majority of residents believe that minimum wage is too low compared to our housing and living costs.
If you look though, almost 40% of those who previously stated that minimum wage is too low then stated that they would not be likely to vote to raise the minimum wage. If they truly believe it's too low, why wouldn't they vote yes to raise it?
Proposed Solutions/Conclusion
Upon researching this topic and interviewing many people on the subject, I found a few solutions that have been proposed to solve or ease this issue.
Many residents believe that raising minimum wage would help this issue because then workers wouldn't have such an economic strain. If minimum wage was raised then workers would make more money, but it would be more costly to businesses, therefore businesses will hire less and/or lay off workers. Businesses do not want to pay more for labor than they already do and they would argue that if they are paying substantially more than they were for the same person to work then the worker can work harder to make up for it, so they would have less people working at once. This would lead to higher unemployment rates within our community. So here is the question: Is it better for workers to make more or have more people working?
Another idea proposed is allowing residents to lease the land they build a house on. They would something like a 100 year lease, so they wouldn't own the land, but they would own the house on top. This would lower the cost overall for the house, but a land investment appreciates over time due to supply and demand (especially with the lack of expansion opportunity in the Flagstaff housing market) while a building depreciates over time due to degradation of the building. This is a poor choice because you would be losing money no matter how you do it, and what happens after the lease is up? I asked Mr. Neighbors about this when interviewing him, and he said that there are multiple houses in Flagstaff utilizing this idea, but even the city (who leases the land to them) doesn't know what happens after the lease is up. He said they will most likely buy the property from the owner, but it would be at a fraction of the cost they paid to build it, or the owner can attempt to move the house, which is more money than it's worth.
Another option that wasn't brought up in any of the interviews but was proposed by residents in my public opinion poll is to raise taxes for second home buyers and therefore discouraging second homes. By doing this we would alleviate some of the competition in the housing market and make housing for residents more available, but this would deteriorate a portion of the tourism market that many Flagstaff businesses rely on. This sounds like a good idea if you are not a second home buyer, but this would affect many Flagstaff businesses and ultimately be detrimental to them.
In conclusion, I found many solutions that have been proposed, but ultimately none that residents and the city are willing to commit to in order to really solve the issue. Residents would like a change but don't want to pay for one, they just want it to all of a sudden be fixed. They wouldn't pay more taxes or really do anything to help others afford to live here but they claim it is a detrimental issue that needs solving. Real Estate Brokers believe that it is an issue, but the scenery and quality of life is worth it, so they don't think it needs solving. The Mayor says it is an issue and there are small steps that are already being taken to alleviate the issue, although it won't ever be solved all together. I myself have decided after researching this extensively for over 6 months now that it is an economic issue, but not a solvable one. Housing is expensive because everyone wants to live here. It's a simple supply and demand issue. There is a great quality of life here and it's an amazing place to raise children. People love it here and it is great for retirement, quiet and beautiful. I think our local government is taking the appropriate measures to ease the economic strain but at a certain point this is just how housing in Flagstaff is.
Many residents believe that raising minimum wage would help this issue because then workers wouldn't have such an economic strain. If minimum wage was raised then workers would make more money, but it would be more costly to businesses, therefore businesses will hire less and/or lay off workers. Businesses do not want to pay more for labor than they already do and they would argue that if they are paying substantially more than they were for the same person to work then the worker can work harder to make up for it, so they would have less people working at once. This would lead to higher unemployment rates within our community. So here is the question: Is it better for workers to make more or have more people working?
Another idea proposed is allowing residents to lease the land they build a house on. They would something like a 100 year lease, so they wouldn't own the land, but they would own the house on top. This would lower the cost overall for the house, but a land investment appreciates over time due to supply and demand (especially with the lack of expansion opportunity in the Flagstaff housing market) while a building depreciates over time due to degradation of the building. This is a poor choice because you would be losing money no matter how you do it, and what happens after the lease is up? I asked Mr. Neighbors about this when interviewing him, and he said that there are multiple houses in Flagstaff utilizing this idea, but even the city (who leases the land to them) doesn't know what happens after the lease is up. He said they will most likely buy the property from the owner, but it would be at a fraction of the cost they paid to build it, or the owner can attempt to move the house, which is more money than it's worth.
Another option that wasn't brought up in any of the interviews but was proposed by residents in my public opinion poll is to raise taxes for second home buyers and therefore discouraging second homes. By doing this we would alleviate some of the competition in the housing market and make housing for residents more available, but this would deteriorate a portion of the tourism market that many Flagstaff businesses rely on. This sounds like a good idea if you are not a second home buyer, but this would affect many Flagstaff businesses and ultimately be detrimental to them.
In conclusion, I found many solutions that have been proposed, but ultimately none that residents and the city are willing to commit to in order to really solve the issue. Residents would like a change but don't want to pay for one, they just want it to all of a sudden be fixed. They wouldn't pay more taxes or really do anything to help others afford to live here but they claim it is a detrimental issue that needs solving. Real Estate Brokers believe that it is an issue, but the scenery and quality of life is worth it, so they don't think it needs solving. The Mayor says it is an issue and there are small steps that are already being taken to alleviate the issue, although it won't ever be solved all together. I myself have decided after researching this extensively for over 6 months now that it is an economic issue, but not a solvable one. Housing is expensive because everyone wants to live here. It's a simple supply and demand issue. There is a great quality of life here and it's an amazing place to raise children. People love it here and it is great for retirement, quiet and beautiful. I think our local government is taking the appropriate measures to ease the economic strain but at a certain point this is just how housing in Flagstaff is.