September 9, 2025

Phoenix Faces Intensifying Affordable Housing Crisis

News Summary

The affordable housing crisis in Phoenix, Arizona, has worsened as home prices soar and construction activity declines. With the median home price at approximately $459,000 and rising mortgage rates averaging 6.8%, many middle-income families are struggling to find affordable housing options. Recent reports show that buyers earning around $75,000 can only afford 21% of available listings, a significant drop from before the COVID-19 pandemic. In response, Dream Finders Homes aims to build homes priced below $350,000 to address this critical issue.

Phoenix

The affordable housing crisis in Arizona has intensified, with home prices soaring while construction activity declines. The median home price in the Phoenix metropolitan area has reached approximately $459,000, amid rising mortgage rates that average around 6.8%. These conditions create significant barriers for middle-income households seeking affordable housing options.

Recent data highlights the ongoing struggles that buyers face. Buyers earning around $75,000 can now afford only 21% of available listings, a significant drop from over 50% before the COVID-19 pandemic began. The national median sale price of homes climbed to nearly $374,000 as of June 2025, which is more than double the post-recession low of $140,000 recorded in early 2012. Meanwhile, the median earnings for full-time workers have only increased by 55% during the same span, exacerbating the affordability crisis.

Furthermore, homeowners are feeling the impact of higher mortgage rates, which have pushed monthly mortgage payments up by nearly 60% compared to three years ago. This surge in costs significantly raises the financial burden of homeownership for many buyers. Additionally, there remains a persistent shortage of starter homes, severely limiting affordable options for those attempting to enter the housing market.

Residential construction activity has experienced a substantial decline, with inflation-adjusted spending on construction dropping 8.5% between June 2024 and June 2025. The rates of borrowing have surged for builders, compounded by rising labor and material costs that have diminished profit margins. The national average construction value for new housing units in 2024 stood at $260,229, reflecting a 7.6% increase from the previous year. Coastal metropolitan areas, such as Miami, Florida, and San Francisco, California, reported the highest construction values per unit at $391,718 and $369,681, respectively.

In contrast, several states maintain low average construction values, including Delaware at $146,106 and New Jersey at $170,086. Major metropolitan areas that are producing affordable new housing include Omaha, Nebraska, Richmond, Virginia, and New York City, with average construction costs of $172,691, $180,794, and $182,378 respectively.

In response to these challenging market conditions, Dream Finders Homes has announced its entry into the Arizona market, focusing on providing homes priced below $350,000. Their first development, Rancho Mirage, will offer homes starting from $319,000 and will include various floor plans to appeal to potential buyers. The company plans to expand its development of affordable communities in Goodyear, Surprise, Buckeye, Mesa, and San Tan Valley, aiming to address the pressing lack of affordable homes in Phoenix.

Experts have noted that the lack of affordable housing in Phoenix is worsening due to the dual challenges of rising prices and increasing mortgage rates. By achieving economies of scale, builders like Dream Finders Homes seek to maintain quality while offering lower-priced homes. The ongoing affordable housing crisis underscores the urgent need for expanded housing solutions to support buyers navigating these challenging economic conditions.

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Author: STAFF HERE PHOENIX WRITER

PHOENIX STAFF WRITER The PHOENIX STAFF WRITER represents the experienced team at HEREPhoenix.com, your go-to source for actionable local news and information in Phoenix, Maricopa County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Waste Management Phoenix Open, Cactus League Spring Training, and Arizona State Fair. Our coverage extends to key organizations like the Greater Phoenix Chamber of Commerce and Visit Phoenix, plus leading businesses in technology and healthcare that power the local economy such as Intel and Banner Health. As part of the broader HERE network, including HERETucson.com, we provide comprehensive, credible insights into Arizona's dynamic landscape.

STAFF HERE PHOENIX WRITER

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