Census data: Arizona overbuilt during housing boom

Arizona's housing crash showed that too many homes had been built during the boom.

Results from the 2010 census, released Thursday, show for the first time just how overbuilt the state's housing market became and which parts of the Valley were affected the most.

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Overall, the number of Arizona housing units, including single-family homes, condominiums and apartments, increased 30 percent from 2000 to 2010.

The state's population grew 25 percent during the same time.

In short, the state gained far more homes than it did people.

"The census confirms that most new homes built in metro Phoenix during the boom are still vacant or only temporarily filled by renters because they were bought by investors," said Jim Rounds, an economist with Scottsdale-based Elliott D. Pollack & Co.

The gap between housing and population growth is even greater than the raw numbers suggest because, on average, almost three people live in a home in Arizona. For the growth rates to match, the state would need to add about three new residents for each new housing unit.

Economists and other growth experts suspected Arizona's population estimates during the housing boom were flawed. Houses were built and plans made for far more residents than actually lived here.

During 2005, the peak for homebuilding in the Valley, a record 65,000 new houses were constructed.

A 2008 Arizona Republic analysis found the state's population estimates have long been heavily weighted toward how many homes are built and sold, as opposed to other factors such as birth and death rates. The state count assumed those homes were being filled with new residents.

New suburbs

Many of metro Phoenix's newest, most far-flung communities experienced the highest rates of population growth during the past decade.

But while those cities were growing, their housing supplies were growing even faster, outpacing the number of new residents.

Now, those communities are dealing with some of the highest vacancy rates.

The population of Buckeye in the far west grew by 678 percent during the decade. However, builders constructed homes for even more new residents.

In 2000, the city had 2,348 housing units; in 2010, it had 18,207. Now, Buckeye's housing-vacancy rate is one of the highest in the region at nearly 21 percent.

South of the Valley, the city of Maricopa led the state for growth with a 4,000 percent increase in population from 2000 and 2010. In 2000, the city had 3,216 housings units; in 2010, it had 17,240. About 17 percent of homes there are vacant.

The population of northwest Valley city Surprise grew by 281 percent, even more than expected. Still, 18 percent of its housing inventory is empty.

Arizona's overall housing vacancy rate is 15.6 percent, which is actually much lower than Census Bureau estimates for the past few years.

In 2009, the Census placed the state's vacancy rate at 22.4 percent. Other states saw similar variances, and it's not yet clear why those numbers changed.

Part of the issue could be tracking housing vacancies in areas popular with owners of second homes, who weren't around in April when Census workers tried to contact them.

Second homes

It is unclear how many Arizona vacancies can be attributed to the second-home phenomenon.

Many of Arizona's mountain communities posted extremely high housing-vacancy rates. Those rates would be expected in spots where many homes are used only as summer getaways.

Munds Park, Greer and Christopher Creek all have housing-vacancy rates above 75 percent, according to the census.

The vacancy rates of most metro Phoenix cities could be partly attributed to second-home dwellers who visit only in the winter. Those residents likely were counted in their homes in other states, rather than in Arizona.

Some Phoenix-area cities are popular with those out-of-state residents but have more vacant homes than expected.

Carefree, north of Scottsdale, is home to many million-dollar houses. Almost 27 percent of them are vacant. Gold Canyon, a high-end housing and golf area in the southeast Valley, has a 29 percent vacancy rate.

Accurate counts

The new census data may have some flaws, but it still provides better figures for tracking growth than Arizona used over the past decade.

Governments, utilities, builders and small businesses rely on accurate growth figures to plan for the future.

When Arizona's growth began in the 1950s, population figures were lagging, so state economists and business owners started using data on housing as a gauge of how many people were moving here.

The method, heavily reliant the number of homes constructed, worked well for Arizona until the housing boom. Then, a record number of investors purchased homes that they never planned to live in. Many of those investors were counted as residents.

Now, state officials and housing experts say the method will have to be revamped, based on the disparities the new census shows.

by Catherine Reagor and Ronald J. Hansen The Arizona Republic Mar. 11, 2011 12:00 AM





Census data: Arizona overbuilt during housing boom