The number of vacation rentals in Lake Havasu City has risen by almost 40% in the past year, but affordable housing throughout Arizona is continuing to plummet.
According to New York-based AllTheRooms, a group that promotes vacation rentals nationwide, Havasu has become one of the fastest-growing vacation rental markets in the U.S. In Havasu, homeowners have offered 460 more rooms for rent than in 2018, with an average price per night of $194. According to AllTheRooms data, Havasu homeowners received $8.67 million in bookings from May 2018 to May 2019, representing a growth of about 55% during that time frame.
The group says that a major contributing factor for the rising demand for vacation rentals in Havasu may be a decline in mortgage rates this year, continuing a downward trend that began in 2011. Lower mortgage rates, according to a report from AllTheRooms this week, have improved potential returns for investors in buy-to-rent properties.
Short-term rentals are a growing trend in the Havasu region, and according to Lake Havasu City Mayor Cal Sheehy, recent legislation by Arizona lawmakers will allow the city to manage them. Vacation-renters will be required to follow guidelines in Havasu such as providing visitors with a “good neighbor brochure,” paying proper sales taxes, and registering their respective rentals with the city.
For long-term renters, however, options have become fewer throughout Arizona.
“It’s been identified as an issue nationwide,” Sheehy said. “Short-term rentals are increasing in number, diminishing the availability of long-term rentals for local citizens.”
According to a March report by the National Low Income Housing Coalition, an annual household income of $38,390 would be necessary to afford a two-bedroom long-term rental home in Arizona at fair market rent, and 78% of extremely-low income renter households suffer from a severe cost burden, defined as paying in excess of half their monthly income on rent. According to the Housing Coalition, the majority of such households are occupied by seniors and members of Arizona’s labor force.
Arizona has about 25 available, affordable rental units for every 100 extremely low-income rental households – about 32% less than the national average, the coalition’s report said. As of March, only Nevada and California had fewer such units available.
Sheehy and city officials have been speaking with Mohave County Housing Authority representatives in identifying solutions to Havasu’s affordable housing shortage.
“We’re always willing to work with developers interested in building homes here,” Sheehy said. “We’ve met with the Mohave County Housing Authority to see what kinds of projects could be built to provide some relief for citizens. We don’t have any specific plans in mind at the moment, but there are great opportunities in Havasu, and there is assistance for companies looking to build housing here. We’re in a great position to move forward if someone is ready to invest in a project of that type.”
According to Arizona Housing Coalition Research Quality Coordinator Joanna Sagar, affordable housing shortages are affecting rural areas especially.
“It’s definitely a big problem, and it’s affecting low-income households,” Sagar said. “Even if people can get vouchers for affordable housing – which are hard to come by, themselves – it’s very difficult to even find properties affordable enough to use them. The lack of affordable housing is impacting services that are trying to help the homeless, and rural communities are feeling it the most.”
Sagar says the Arizona Housing Coalition has attempted to work with state, local and federal officials to ease the housing struggle for Arizona’s lower-income renters, and advocates have made some headway. To challenge Arizona’s shortage in affordable housing, state legislators this year added $12.5 million to the Arizona Housing Trust Fund, which is budgeted specifically to provide grants for affordable housing and homeless services.
“Now they’re trying to figure out what to do with the money, and looking at what cities can do to incentivize property owners,” Sagar said.