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Renters struggle with rising cost, tight budget amid Valley housing frenzy

(Photo by Justin Sullivan/Getty Images)

This story is part of KTAR News’ “Arizona’s Rising Real Estate” weeklong special series on 92.3 FM, online and our app.

PHOENIX — Renting is the only option for some in the Valley as home prices continue to increase, and even then, rising rent prices are a daunting reality.

“Affordable housing” is defined as housing that costs 30% or less of a person’s income. For some lower-income earners, that can be hard to achieve.

The Morrison Institute for Public Policy at Arizona State University recently released a report titled “Building Arizona,” which takes a closer look at the rental market in the Valley and how impenetrable it can be for some.

Katie Gentry, policy analyst with the institute, told KTAR News 92.3 FM that many factors go into the issue, including limited supply, stagnant wages and competition that locks many out of the market.

One benchmark they examined was the fair-market rent for a two-bedroom apartment in the Valley, which is $1,173.

That is already out of reach for many Arizonans, according to Gentry.

“If you’re not spending more than 30% of your income on rent, you would have to make $22.56 an hour,” she explained. “And that’s just not reality.”

The Morrison Institute looked at people making around $32,000 a year to get a better picture of lower-income earners. That comes up to about $15 an hour, a hypothetical wage for people in the service industry.

The institute found the number of rentals considered affordable for people making that wage has been halved since 2014.

“Our market is just not keeping up with building those lower-income rentals,” Gentry said.

In fact, she estimated there is a shortage of around 135,000 affordable rental homes, or about 26 available for every 100 low-income renters.

Renters as a result have to live beyond their means, spending more than that 30% of their monthly income on housing.

A lot of Arizonans are finding themselves in that situation.

“We know across the Valley about 45% of our households are cost-burdened,” Gentry said.

Spending more than the recommended amount on rent means less money to spend back into the local economy. It can also mean making tough decisions about spending that Gentry knows can affect people’s health and well-being.

“Lack of nutrition, health-related outcomes like depression… and your children aren’t doing as well in school,” Gentry said.

“We all know somebody who’s experiencing this. I think all of these things add up and make us less dynamic as a city.”

Alex and Perla know this firsthand. They work in food service making around $13 an hour and rent a studio apartment in Glendale.

“We definitely struggle with medical bills, and my student loans,” Alex said. “Everything really adds up. At the end of the month, we’re left with like $20.”

Alex and Perla have also experienced the rising rent costs explored in the Morrison Institute report. An ad they saw for their apartment complex a year ago was $100 cheaper than what they’re currently paying.

The situation with rentals affects everyone, even people who own houses.

“[Buyers] got a great price for selling their house, but now they don’t have a place to go to,” explained Bobby Lieb, a long-time Phoenix real estate agent.

That means they’re also entering the race for rentals, along with people coming in from out of town.

Gentry thinks the idea of Californians coming to Arizona is an over-simplification of the issue.

“Our population is just growing in general from all over, and we can’t afford it anymore,” she said.

It’s not just Arizona that isn’t seeing a pay raise.

The Morrison Institute’s report found that, since the 1960s, inflation-adjusted median rent has increased by 61%, while the median renter’s income has only increased by 5%.

“Unfortunately for local Arizonans, we are not seeing that increase in wages,” Gentry said. “And you’re having to compete with people who aren’t from here.”

This means that the demographics and character of the Valley could change as more people flood into the state with more buying power than the locals.

Gentry did have some solutions in mind, and one stood out above the rest.

“Really, we need more incentives for developers to build affordable housing,” she said. “Building luxury and affordable apartments costs virtually the same amount, so offering incentives to offset the profit margin would give developers a reason to build affordable.”

Gentry also stressed the importance of more building in general. By freeing up public land and streamlining zoning, there will be more choice for Valley residents looking for a place to live.

“We’re playing catch up,” she admitted. “I don’t think it’s completely off the table, but we do need to take some big steps forward to be able to overcome the deficit we’re in right now.”

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