Arizona may be limiting construction due to ongoing groundwater shortages, but real estate data doesn’t expect development to dry up.
Realtors from across the state express confidence in future of state market KJZZ Report. The headwinds came after panic over the state’s latest restrictions.
After a state report suggested a possible shortage of groundwater in Phoenix over the next century — the typical barometer used in Arizona to evaluate projects — Gov. Katie Hobbs began limiting construction of new zoning. Construction would not be approved if Phoenix groundwater was the only source of water.
Real estate isn’t ready to panic. For starters, there’s no danger of projects in the pipeline, which means there are still about 80,000 developments in the Phoenix metro area. If developers can use surface water or reclaimed water, they will also be allowed to proceed.
While development in Phoenix itself has its own problems, developers will be able to turn to major cities as places where projects are still viable, even if projects in the suburbs become more expensive or impossible due to lack of water.
Then there’s the real estate market. Phoenix has been one of the hottest markets (pun intended) since the pandemic began. The median sale price of homes in the metro has been consistently higher than the national market.
Sindy Ready, vice president of the Arizona Association of Realtors, believes the market will always be attractive to buyers.
“I think people always want to live in Arizona, we have sunshine, we have beautiful hiking and biking trails, golf and tennis,” Reddy told the publication.
Arizona is in the midst of a 23-year drought as rising temperatures have lowered water levels in the Colorado River, which feeds 40 million people across seven states. Increased evaporation rates and high water demands from crops are also contributing to water stress.
read more
There are particular concerns about how groundwater shortages and development restrictions will affect the region’s historically strong housing affordability.
— holden warner
