Zoning Reforms Can Mean More Homes, Lower Costs for Arizona

Despite the strong bipartisan action the Arizona Legislature took last year to allow more homebuilding, the state’s housing shortage — and high costs for renters and homebuyers — persists. The legislature advanced innovative approaches to increase housing — like allowing backyard casitas; authorizing duplexes, triplexes and fourplexes near business districts, and streamlining construction approval processes. To continue finding solutions, state lawmakers should now act on a suite of pending legislation.

Last week, the Arizona Senate took a great step by passing the “Starter Homes” legislation to enable the construction of smaller homes on smaller lots in new developments. The House should pass its companion bill, HB2371. Smaller houses generally cost less to construct, and big lots are expensive — so the legislation can pave the way to building more starter homes at lower prices for younger generations, first-time homebuyers and others.

One example is the city of Houston, which took similar steps to reduce minimum lot sizes. The new houses that were built there cost an average of $200,000 less than comparable new homes. And here in Arizona, the city of Nogales has also taken action and is hoping for similar results.

The need is dire. The monthly cost of owning a home in Arizona jumped 78% over the past seven years, and rents more than doubled over the same period. Thirteen percent of Phoenix-area households still spend at least half their income on housing. Meanwhile, wages in Arizona have not kept up with rising housing costs.

Research further shows that high housing costs are the primary driver of homelessness as people compete to rent a limited supply of homes, and wealthier residents can outbid others for available housing. During the past seven years, Arizona’s limited supply of homes and resulting high housing costs have driven up homelessness in Arizona by 65% — well above the corresponding national increase of 40%.

Why is Arizona — along with much of the West — facing a housing shortage? Experts agree that local regulations and high construction costs are major causes. Without enough homes in the state, newcomers from California (or other states) can outcompete Arizonans for limited housing stock.

The “Starter Homes” bill is a good beginning. The Legislature can do further by expanding the availability of casitas. Last year’s legislation allowed casitas in larger cities, but counties can benefit from them too. These small, accessory units generally rent for less than studio apartments, making them affordable for lower-income residents. Casitas increase housing supply and increase home values by adding a rental housing unit to an existing lot that can later serve a family’s aging parents or young adults. The House should pass HB2928 to allow for more casita construction in counties.

Finally, like zoning regulations, onerous permitting procedures can slow housing development. Builders face high costs for staff, attorney and consultant time, as well as interest on borrowed money while they wait for local government approvals. SB1353 would streamline and speed up permitting for homebuilding — and the Legislature should pass it. Sixteen states, ranging from California to Montana to Vermont and Texas, have passed legislation in the past two years to streamline permitting to reduce costs and build new homes faster.

Evidence from cities such as Minneapolis and Houston shows that creating more housing — which these proposed changes would prompt — makes housing more affordable for everyone. This year, the Legislature can take proven steps to improve rental affordability, increase homeownership and reduce homelessness for all of Arizona.

Tushar Kansal is a senior officer with The Pew Charitable Trusts’ housing policy initiative, and Enrique Davis-Mazlum, Ph.D., is the Arizona state director of UnidosUS.

This piece originally ran in the Arizona Capitol-Times on March 10, 2025.