Arizona’s housing affordability crisis begins with a shortage of homes, but large investors have worsened the problem by converting thousands of Phoenix-area properties into permanent rentals, a new report argues.
The American Economic Liberties Project’s Phoenix case study, highlighted by KJZZ, traces the shortage to decades of bank failures, financial consolidation and tighter credit for smaller homebuilders. National single-family construction now lags 1990s rates by 20%, even as the population has grown.
Phoenix became a target for Wall Street firms after the 2008 housing crash left foreclosed homes available at steep discounts. Rapid population growth, low property taxes and landlord-friendly laws added to its appeal. Institutional investors owned more than 38,000 Phoenix-area single-family properties in 2022, second only to Atlanta, and controlled an estimated 13% to 14% of the Valley’s single-family rental market by 2024.
The investors did not create the shortage, the report acknowledges, but capitalized on it. More than 25,000 build-to-rent units came online in the Valley over the past five years, creating neighborhoods where houses are available only to tenants.
The supply gap extends beyond corporate ownership. Common Sense Institute estimates Arizona immediately needs 56,000 additional homes and faces a longer-term shortage of roughly 110,000 units. Arizona Housing Coalition Executive Director Nicole Newhouse told Axios institutional investors are an “aggravator,” while the deeper problem is too little housing affordable to most residents.
The study recommends expanding financing for local builders, easing barriers to starter-home construction, taxing land hoarding and eliminating tax preferences for large rental portfolios. It endorses Republican state Rep. Nick Kupper’s House Bill 2325, which would cap institutional investors at 50 single-family homes and give buyers a 60-day head start on new listings. The bill did not receive a vote during the 2026 session.
