By Kevin Erdmann | Arizona Republic
Since March 2015, average hourly earnings has risen in Phoenix by about 34%, while the rental value of the median Phoenix home jumped by more than two and a half times that.
The work needed to pay a month’s rent has gone up from 42 hours to 58 hours in those eight years.
The rising costs are due mainly to a lack of adequate home construction. This has been a problem nationwide since the Great Recession, but it has been especially bad in Phoenix.
Per capita, since 2007, ourlocal housing production has been 59% lower than it had been in the previous 15 years.
Rich families can scale back. Poor ones can’t
When rents across a city go up due to a lack of construction, they routinely go up the most in the poorest neighborhoods, because poor families tend to have fewer options and little choice but to pay.
Families with more resources have more options.
They might give up the extra bathroom or the den. They might trade out for a different home with a longer commute. Or a young adult might stick around a little longer at mom and dad’s.
On an expense as large as housing, this is all normal.
But you cannot make these adjustments easily without gas money or a large house.
Poor families have what economists call “inelastic” demand. When rents rise, they mostly pay them.
Richer families have more “elastic” demand. They can make up for the difference by getting by with less.
Rents are rising faster in poor neighborhoods
And sure enough, according to rent data from Zillow.com and income data from the IRS, since 2015, rents in the poorest parts of Phoenix have increased by about 20% more than in the richest areas.
In a typical ZIP code with an average reported income of about $150,000, home rental values made up about 13% of residents’ income in 2015.
