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Rental vacancy rates back to pre-recession levels as bills threaten to create more evictions

By: - February 20, 2019 3:00 pm

Two bills working their way through the Arizona House of Representatives could harm renters in the Grand Canyon State, which currently is at its lowest rental vacancy rate since before the Great Recession.

Rental vacancy rates are defined by the United States Census Bureau as the percentage of the rental housing market that is currently unoccupied or vacant.

The most recent data, which does not include 2018, shows that Arizona’s rental vacancy rate sat at around 7.5 percent in 2017. That’s only slightly above the national average of 7 percent.

In the Phoenix metro area, rental vacancies are around 6 percent.

But vacancy rates for rentals used to be much higher in Arizona.

From 1999 to present, rental vacancy rates rarely dropped below double-digits, with the highest being in 2009 when nearly 18 percent of the rental market sat vacant. It wasn’t until 2015 that vacancy rates dropped below 9 percent, a rate last seen in 1993.

However, when the rental vacancy rate is combined with the home vacancy rate, Arizona has a gross vacancy rate of 17 percent. The national average is 12 percent.

But even a vacancy rate as low as 3 percent can have an adverse impact on local housing markets, according to a recent study.

A study of low-use properties, which includes vacant units, in England and Wales found that these properties can change the housing values in areas where they are.

Furthermore, they discovered that many of these units sat in the same geographical area, which disproportionately hurt people who lived there as compared to other areas.

The main goal of the researchers was to quantify how many low-use properties existed and to determine how much revenue could be brought in if a tax on the assessed value of a low-use home was implemented.

The idea for the tax came from Vancouver, which taxed such properties at 1 percent of the assessed value. That means if your apartment or home is worth $200,000 and was not occupied, you’d owe $2,000 in taxes for that property. The tax is expected to generate $30 million for Vancouver in its first year.

The city says it has seen a 15-percent decrease in vacant properties and of the 163 properties now deemed occupied, approximately half of them are rentals.

The researcher behind the England study sees this type of tax as a remedy to affordable housing woes.

“An empty homes tax may be more effective, with the potential to generate a not inconsiderable income for local authorities, whilst taxing people who are typically not eligible to vote in local elections, or encouraging them to rent out their properties,” researcher Jonathan Bourne of University College London wrote in the study.

In Arizona, the current vacancy rates could rise if the concerns of activists come to fruition.

Housing advocates are worried about two housing bills in particular, House Bill 2115 and House Bill 2358.

The first would make regulations of landlord and tenant issues strictly a matter of state control, meaning local municipalities would have to take a hands-off approach to renting in their areas.

“You’d take away a lot of the hammer that comes down on rentals in all these municipalities,” tenant advocate Ken Volk previously told the Arizona Mirror.

The second bill could give landlords the ability to evict tenants who pay their rents with assistance from non-profits, churches and the federal government’s Section 8 housing voucher program.

“I’m afraid that we’re opening a broad door to be able to evict people,” Rep. Kelli Butler, D-Paradise Valley said during a committee hearing on the bill. “I’m afraid they’re going to be kicking people out more quickly than they should.”

The Arizona Republic reported earlier this week that evictions in Maricopa County are still on the rise, with more than 43,000 reported in 2018, a three-percent increase from the previous year.

A bill proposed by Sen. Lela Alston, D-Phoenix, would create an eviction prevention fund with $1 million from the general fund, but the bill has yet to be heard in committee despite bipartisan support. As this week is the final week for Senate committees to hear Senate bills, Alston’s proposal appears to be effectively dead.

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Jerod MacDonald-Evoy
Jerod MacDonald-Evoy

Reporter Jerod MacDonald-Evoy joins the Arizona Mirror from the Arizona Republic, where he spent 4 years covering everything from dark money in politics to Catholic priest sexual abuse scandals. Jerod has also won awards for his documentary films which have covered issues such as religious tolerance and surveillance technology used by police. He brings strong watchdog sensibilities and creative storytelling skills to the Arizona Mirror.

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