Tag Archives: Phoenix

Lack of groundwater means limiting new development in the Phoenix area

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The sprawling growth that characterizes Phoenix will have to contend with new regulations tied to groundwater:

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Arizona officials announced Thursday the state will no longer grant certifications for new developments within the Phoenix area, as groundwater rapidly disappears amid years of water overuse and climate change-driven drought.

A new study showed that the groundwater supporting the Phoenix area likely can’t meet additional development demand in the coming century, officials said at a news conference. Gov. Katie Hobbs and the state’s top water officials outlined the results of the study looking at groundwater demand within the Phoenix metro area, which is regulated by a state law that tries to ensure Arizona’s housing developments, businesses and farms are not using more groundwater than is being replaced.

The study found that around 4% of the area’s demand for groundwater, close to 4.9 million acre-feet, cannot be met over the next 100 years under current conditions – a huge shortage that will have significant implications for housing developments in the coming years in the booming Phoenix metro area, which has led the nation in population growth.

State officials said the announcement wouldn’t impact developments that have already been approved. However, developers that are seeking to build new construction will have to demonstrate they can provide an “assured water supply” for 100 years using water from a source that is not local groundwater.

The sprawl of the United States depends on cheap and abundant water available for the new properties. Phoenix is not alone in pursuing sprawl or in not having to think much about water for a long time.

However, the immediate and long-term future in at least a few metro areas involves a lack of water. This is certainly an issue in the West and Southwest. It could be in play in other regions as well.

Since sprawl is so ingrained in American daily life and in assumptions about successful communities, seeing how developers and communities procure water could get really interesting.

When a sprawling suburban development in the Southwest loses its water supply due to drought

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On the edges of the Phoenix metropolitan region, one recently constructed suburban development lost its access to water:

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Joe McCue thought he had found a desert paradise when he bought one of the new stucco houses sprouting in the granite foothills of Rio Verde, Ariz. There were good schools, mountain views and cactus-spangled hiking trails out the back door.

Then the water got cut off.

Earlier this month, the community’s longtime water supplier, the neighboring city of Scottsdale, turned off the tap for Rio Verde Foothills, blaming a grinding drought that is threatening the future of the West. Scottsdale said it had to focus on conserving water for its own residents, and could no longer sell water to roughly 500 to 700 homes — or around 1,000 people. That meant the unincorporated swath of $500,000 stucco houses, mansions and horse ranches outside Scottsdale’s borders would have to fend for itself and buy water from other suppliers — if homeowners could find them, and afford to pay much higher prices…

Water experts say Rio Verde Foothills’ situation is unusually dire, but it offers a glimpse of the bitter fights and hard choices facing 40 million people across the West who rely on the Colorado River for the means to take showers, irrigate crops, or run data centers and fracking rigs.

Given conditions in the West and Southwest, this could become more common for suburban areas. See earlier posts here and here.

One key from the article: when you move into a home, is the water supply guaranteed (as much as possible)? It sounds like there was an agreement to sell water to this new development. If you have such agreements or live in unincorporated areas or depend on other water sources, will they always be there?

Water is typically one of the lower concerns of those moving to the suburbs. It is assumed to be there. There might be the occasional problem with pipes, particularly in older homes, but the water should keep flowing. Other infrastructure concerns tend to take precedence; are there enough roads for new residents? Schools?

Without cheap water, it is harder to live the suburban life. As the article notes, how does one wash laundry or dishes with limited or really expensive water? Flushing toilets? This does not even get close to beloved amenities, like swimming pools.

Hot rental market in Phoenix and supplying enough housing

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In an article about a large and expanding encampment of the homeless in Phoenix, here are some details about how rental prices in the city have shot up:

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“People say, ‘Are you surprised?’ And I say, ‘No, not really, because all of the housing forces in Phoenix and Maricopa County have been working against us for years,’” said Human Services Campus Executive Director Amy Schwabenlender, who works in the area with the encampment, sometimes referred to as “the Zone.” “We’ve had ongoing population increases in Phoenix and Maricopa County. We haven’t had housing production at all income levels keep up and meet that increase in population.”

Real estate investors are pouring cash into Phoenix and driving up prices. Rents there have spiked 25.6% over the past year, compared to a 15.9% increase in the U.S. from January 2021 to January 2022, according to data analyzed by Zillow. (Other popular Sun Belt cities like Miami and Tampa have also seen dizzyingly fast increases in rent.) Vacancy rates in Phoenix, or the availability of places for people to rent, are also at their lowest in 50 years, according to the Arizona Republic. 

While much of the rest of the article focuses on addressing housing for the homeless, this sounds like a bigger issue. This is an area with a growing population: Phoenix is now the fifth-largest city in the US and had a little over 100,000 residents in 1950 before experiencing double-digit percentage population growth in all but one decade since. Housing opportunities, particularly in rentals, have not kept up. American sprawl often produces a lot of single-family homes but necessarily cheaper houses or multi-family units for those who cannot secure a sizable mortgage.

What can Phoenix and surrounding communities do? Addressing housing in the United States is a difficult task. It will take concerted effort across communities for years. It may not be popular. But, it is essential for ensuring housing for all who need it.

It would be great to have an example of a city and region in the Sun Belt – roughly Virginia to southern California – that has successfully addressed this even as they have experienced significant growth in recent decades. I do not know if there is a great example, outside of some places not becoming too popular such that it raises demand and housing prices.

Zillow sought pricing predictability in the supposedly predictable market of Phoenix

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With Zillow stopping its iBuyer initiative, here are more details about how the Phoenix housing market was key to the plan:

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Tech firms chose the Phoenix area because of its preponderance of cookie-cutter homes. Unlike Boston or New York, the identikit streets make pricing properties easier. iBuyers’ market share in Phoenix grew from around 1 percent in 2015—when tech companies first entered the market—to 6 percent in 2018, says Tomasz Piskorski of Columbia Business School, who is also a member of the National Bureau of Economic Research. Piskorski believes iBuyers—Zillow included—have grown their share since, but are still involved in less than 10 percent of all transactions in the city…

Barton told analysts that the premise of Zillow’s iBuying business was being able to forecast the price of homes accurately three to six months in advance. That reflected the time to fix and sell homes Zillow had bought…

In Phoenix, the problem was particularly acute. Nine in 10 homes Zillow bought were put up for sale at a lower price than the company originally bought them, according to an October 2021 analysis by Insider. If each of those homes sold for Zillow’s asking price, the company would lose $6.3 million. “Put simply, our observed error rate has been far more volatile than we ever expected possible,” Barton admitted. “And makes us look far more like a leveraged housing trader than the market maker we set out to be.”…

To make the iBuying program profitable, however, Zillow believed its estimates had to be more precise, within just a few thousand dollars. Throw in the changes brought in by the pandemic, and the iBuying program was losing money. One such factor: In Phoenix and elsewhere, a shortage of contractors made it hard for Zillow to flip its homes as quickly as it hoped.

It sounds like the rapid sprawling growth of Phoenix in recent decades made it attractive for trying to estimate and predict prices. The story above highlights cookie-cutter subdivisions and homes – they are newer and similar to each other – and I imagine this is helpful for models compared to older cities where there is more variation within and across neighborhoods. Take that critics of suburban ticky-tacky houses and conformity!

But, when conditions change – COVID-19 hits which then changes the behavior of buyers and sellers, contractors and the building trades, and other actors in the housing industry – that uniformity in housing was not enough to easily profit.

As the end of the article suggests, the algorithms could be changed or improved and other institutional buyers are also interested. Is this just a matter of having more data and/or better modeling? Could it all work for these companies outside of really unusual times? Or, perhaps there really are US or housing markets around the globe that are more predictable than others?

If suburban areas and communities are the places where this really takes off, the historical patterns of people making money off what are often regarded as havens for families and the American Dream may continue. Sure, homeowners may profit as their housing values increase over time but the bigger actors including developers, lenders, and real estate tech companies may be the ones who really benefit.

Cities that rise from the dead

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With Easter today and Atlanta in the news, I was thinking of American cities that claim to have risen from the dead. The phoenix has been the symbol for Atlanta for over a century:

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Like the Phoenix, Atlanta had risen from its own ashes following its destruction in 1864. Many times during the city’s history, Atlanta has redefined and reinvented itself, rising again as the city slogan, Resurgens, suggests. The “Atlanta Spirit” is another oft-referenced slogan describing an entrepreneurial and ambitious attitude that has shaped the city’s historical identity.

After the Great Chicago Fire of 1871, boosters and others were eager to rebuild:

On October 11, 1871, three days after the fire started that devastated the city, Bross’s Tribune proclaimed, “CHEER UP. In the midst of a calamity without parallel in the world’s history, looking upon the ashes of thirty years’ accumulations, the people of this once beautiful city have resolved that CHICAGO SHALL RISE AGAIN.”

Bross, who was an avid promoter of the city, predicted that Chicago would be rebuilt in five years and would reach a population of 1 million by the turn of the century, as Donald Miller reports in City of the Century.

There is an accepted narrative that the fire created a blank slate upon which Chicago was quickly rebuilt. That blank slate allowed it to become a dynamic city of innovative architecture with a fresh skyline dotted with a brand-new building called the skyscraper.

“The great legend of Chicago is that it’s a ‘phoenix city’ – it almost instantly rebuilt itself bigger and better from the ashes. And to a certain and significant extent, that’s true,” said Carl Smith, professor emeritus of English at Northwestern University and author of Chicago’s Great Fire: The Destruction and Resurrection of an Iconic American City.

And the city of Phoenix draws on the presence of people hundreds of years before:

Those former residents were industrious, enterprising and imaginative. They built an irrigation system, consisting mostly of some 135 miles of canals, and the land became fertile. The ultimate fate of this ancient society, however, is a mystery. The accepted belief is that it was destroyed by a prolonged drought. Roving Indians, observing the Pueblo Grande ruins and the vast canal system these people left behind, gave them the name “Ho Ho Kam” — the people who have gone…

By 1868, a small colony had formed approximately four miles east of the present city. Swilling’s Mill became the new name of the area. It was then changed to Helling Mill, after which it became Mill City, and years later, East Phoenix. Swilling, having been a confederate soldier, wanted to name the new settlement Stonewall after Stonewall Jackson. Others suggested the name Salina, but neither name suited the inhabitants. It was Darrell Duppa who suggested the name Phoenix, inasmuch as the new town would spring from the ruins of a former civilization. That is the accepted derivation of our name.

Many cities have faced crises, disasters, or unusual starts. Local histories and narratives can also emphasize positive moments (and downplay negative moments). The rising from the ashes, overcoming great obstacles, coming back to life, these are all powerful narratives for big cities. They imply success, progress, and hopefully growth.

What these narratives mean now may be harder to ascertain. What does the aftermath of the Chicago Fire mean for Chicago today? Is Phoenix still rebuilding a great civilization? More than 150 years after the Civil War, is Atlanta continuing to reinvent itself? A city rising from the dead once is impressive but it may be harder to pull off over decades of change.

Argument: “Why more McMansions are bad news for first-time home buyers”

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McMansions may be good for builders but not so much for people looking to purchase their first house:

Home building has been steadily picking up this past year after taking a sharp nosedive during the recession, although production is still far below historical norms. Orr said home builders are moving forward with cautious optimism, being wary of their pre-recession mistake of overbuilding.

So to help make up for the slowdown, builders are now making homes larger once again. Bigger homes means bigger sales revenue — and for only a minimal bump in construction costs, Orr said.

The trend has been to the detriment of first-time and lower-income buyers, who are finding both the new and existing home markets offer them very few options today.

“They (home builders) have kind of abandoned that sector,” Orr said.

The existing home market nationwide — but particularly in Phoenix — has been facing a chronic shortage of homes for sale, and the problem is most severe in price ranges below $200,000.

Many buyers have thus turned to new construction out of frustration. But given the sharp price hikes of new homes recently, lower-income buyers aren’t finding the same relief, Orr said.

In other words, builders can make more money on the bigger homes for those who still have money to play with. But is this just about builders? I wonder if there are two other things going on here:

1. The article hints at a depressed existing house market, suggesting that there isn’t enough movement in the housing market for these older smaller homes, what might be called “starter homes,” to become available in large numbers.

2. In addition to not much existing inventory opening up, perhaps there simply aren’t enough buyers for smaller houses for builders to take notice. What numbers are we talking about – how many first-time home buyers in the Phoenix are not able to find a home they want? This reminds me of recent data from the Chicago area: while housing starts may be up a large percent, the housing market is still not operating at normal.

That all said, if people want to get into purchasing a home can’t do so or are delayed, this could contribute to more long-term problems for the US housing market.

No one-size-fits-all approach for building a downtown baseball stadium

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A new study examines the divergent outcomes after the construction of new baseball stadiums in downtown Denver and Phoenix:

That Coors and Chase Fields had diverging fates is no accident but rather the result of poor planning, write Arizona State researchers Stephen Buckman and Elizabeth A. Mack in a recent issue of the Journal of Urbanism. Phoenix’s attempt to copy Denver’s success shows that sports stadiums are not a one-size-fits-all solution to downtown redevelopment efforts. On the contrary, Buckman and Mack argue, these projects must strongly consider the natural form of the city to avoid failure:

A key consideration that is often overlooked in the planning phase of these projects is the historical urban growth patterns and resulting urban form of the cities in which stadium development projects are proposed.

Buckman and Mack conducted a point-by-point review of both stadiums in their effort to determine what factors contributed most to their success, or lack thereof. They quickly found that population differences weren’t the source of the difference. Phoenix and Denver had similar demographic profiles at the time the fields were being proposed, with no marked variations in age of the potential fan base or ability to pay for tickets.

Where they began to see a clear difference was in urban form. Metropolitan Phoenix is a widespread area without a distinctive downtown core. Its satellite cities of Glendale, Tempe, and Scottsdale all have significant attractions and downtowns of their own that create what the researchers call a “centrifugal effect” on potential visitors to downtown Phoenix. By some estimates, Phoenix has the least developed downtown core in the country.

Denver, on the other hand, has a historic core that dates back to the city’s founding in 1858. In addition, the city itself is far less expansive: encompassing only about 150 squares miles, to more than 9,000 for metropolitan Phoenix. The result of this urban form, for Denver residents, is a considerably more convenient proximity to the stadium.

More broadly, it sounds like having key structures in and near the baseball stadium is very important, perhaps even more so than the particulars of the stadium itself. In other words, building a stadium with little already existing around it might have little impact on the surrounding area. Downtowns work because they are clusters of activity; there are not just office buildings but also nearby residences, restaurants, and cultural institutions that help insure a broad range of visitors to the downtown. Baseball games then become another activity that people want to go to because the games are part of the scene of the whole area.

I visited Coors Field for the first time this past August during the 2012 American Sociological Association meetings. Since I was staying near the Convention Center, we had to walk about 15 minutes to the stadium. The walk was pleasant in itself; Denver has a nice scene between these two destination points. Unlike some other major cities where the downtown is dominated by large buildings, this area has primarily low-rise buildings. People are outside walking around or eating. The stadium itself seemed to be at the edge of the downtown area closer to I-25 but it was clear plenty of other fans were also walking through the surrounding LoDo neighborhood and enjoying the night.

Another question I would ask as a baseball fan: could attendance be boosted in a more dispersed region if the team was winning? Or do parks like Wrigley Field win at attendance with little effect of record because fans want to have the experience?

By the way, here is a picture from my seat. While Coors Field might be more successful than Chase Field, the team was not good last year and there were plenty of empty seats as well as cheap seats online.

CoorsFieldAug2012

Comparing the architecture of a Phoenix Frank Lloyd Wright house to area McMansions

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A letter to the editor in The Arizona Republic contrasts the worthiness of a Frank Lloyd Wright home and McMansions that are typically found in the area:

The horror of this melee about a Frank Lloyd Wright house is that the men who bought it claim they didn’t know Frank Lloyd Wright from the Wright brothers (New York Times, Oct. 25) and yet they, if left unhindered, decide the fate of a master work of architecture.

In this Mcmansion craze, people employ the horror of the unaesthetic, the death of art. Unlike Wright-designed and constructed homes that seem composed of what nature predicates, “living buildings” that fit the surroundings, these faux Tuscany tract homes on steroids rise up out of the ashes of demolitions in Arcadia, changing the entire landscape of what was once a unique Phoenix neighborhood with their attendant assault on beauty and proportion.

Phoenix does not need to buy the property for the inflated asking price. What the city and its officials need to do is vote for the historic landmark overlay on Dec. 5.

While McMansions can be defined by several characteristics, this letter’s argument relies exclusively on the architecture and design argument. The Frank Lloyd Wright home is a “living building” meant to fit into its surrounding landscape. In contrast, McMansions poorly mimic other housing styles (in this case, importing Tuscany to the Arizona desert), contrast with the landscape, and lack beauty because of their poor proportions.

Frank Lloyd Wright homes are of limited number and according to this Wikipedia list, there are not too many Wright designed buildings in Arizona. See more of the story about the house here and a gallery of images here. According to one of the captions, “The [spiral] house was designed to twist around a central courtyard and also offer views of Camelback Mountain to the north.” And the house may have been a testing ground for another famous work that came later: “Wright chose a spiral design akin to the Guggenheim Museum’s. He had drawn plans for the Guggenheim by then, but it was still some years away from construction.”

Argument: Phoenix is world’s least sustainable city

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I recently ran into an overview of a 2011 look at Phoenix as the “world’s least sustainable city”:

Phoenix, Arizona is one of America’s fastest growing metropolitan regions. It is also its least sustainable one, sprawling over a thousand square miles, with a population of four and a half million, minimal rainfall, scorching heat, and an insatiable appetite for unrestrained growth and unrestricted property rights.

In Bird on Fire, eminent social and cultural analyst Andrew Ross focuses on the prospects for sustainability in Phoenix–a city in the bull’s eye of global warming–and also the obstacles that stand in the way. Most authors writing on sustainable cities look at places like Portland, Seattle, and New York that have excellent public transit systems and relatively high density. But Ross contends that if we can’t change the game in fast-growing, low-density cities like Phoenix, the whole movement has a major problem. Drawing on interviews with 200 influential residents–from state legislators, urban planners, developers, and green business advocates to civil rights champions, energy lobbyists, solar entrepreneurs, and community activists–Ross argues that if Phoenix is ever to become sustainable, it will occur more through political and social change than through technological fixes. Ross explains how Arizona’s increasingly xenophobic immigration laws, science-denying legislature, and growth-at-all-costs business ethic have perpetuated social injustice and environmental degradation. But he also highlights the positive changes happening in Phoenix, in particular the Gila River Indian Community’s successful struggle to win back its water rights, potentially shifting resources away from new housing developments to producing healthy local food for the people of the Phoenix Basin. Ross argues that this victory may serve as a new model for how green democracy can work, redressing the claims of those who have been aggrieved in a way that creates long-term benefits for all.

Since the population of the United States has shifted in recent decades to Sunbelt cities like Phoenix, tackling sustainability in these more sprawling and hot places seems like it is important. I wonder how much this sustainability push would require curbing sprawl and if there are some critics who would argue places like Phoenix (or even the metropolitan regions of cities like Chicago and New York) can’t really be sustainable unless they severely limit sprawl.

In two trips to Las Vegas in recent years, I was struck each time by the landscape when flying into the city. I always enjoy seeing cities from above but Las Vegas (and presumably Phoenix as well) shows stark contrasts between deserts which suddenly turn into subdivisions, lawns, golf courses, and then opulent casinos. It is a quick reminder that some of these Sunbelt cities are carved out of the desert and this requires a lot of resources to maintain and expand.