The Unfortunate Consequence of Drought: Governor Hobbs Puts the Breaks on Growth, How Will It Impact Us?

Photo Credit: ABC15

On this blog we pride ourselves on regularly covering the most pressing issues of Arizona, and two of the most pressing issues of the last few years have been the ongoing water supply issues plaguing the entire region, as well as the crisis of the cost of housing. Both of those items happen to intersect in a recent development that may have major reverberations in several ways throughout the state.

In a recent move, Governor Katie Hobbs decided to slam on the brakes of development and housing supply by pausing development by instructing the Arizona Department of Water Resources to halt giving new licenses to developers in certain cases. This is a significant shift for a state that has never been shy about continuing to build out in its decades of stratospheric growth.

As we have routinely spelled out, the biggest determinant of the out-of-control increase in housing and rent costs over the last few years has been an imbalance between supply and demand, as the supply of housing simply hasn’t kept up with the large number of people moving to the area. We also firmly believe that the best way to keep those cost increases under wrap is to increase the supply of housing; in other words, build more. Clearly, a dictate from the governor to pause development flies in the face of that.

The Rio Verde Foothills water crisis was clearly a watershed moment (pun not intended) that has demonstrated the web of issues that arise with the perpetual desire to build further and further out. Something has had to give. While the NIMBYism inherent in many city councils has done a great job at limiting inventory and keeping rental costs high, it is also not fair to potentially harm the water security of long-term residents for the sake of an infinite growth loop (that we should know is not truly infinite).

The results is a strange new matrix: where housing supply will likely be somewhat constrained going forward combined with affordability issues and perhaps a drop in population growth. After all, the word is likely to get out soon; Arizona has a water issue, you probably don’t want to live there. To a certain degree that will likely dent demand, but in a way that no one truly wants.

The desire for additional sustainability is a welcome one and a necessary one, even if it is a bitter pill to swallow. For decades we have been a growth magnet and have grown from an outpost and afterthought into an economic and political powerhouse since the advent of air conditioning. But we can’t stick our heads in the sand any longer if we want to continue living here for the longer term. Difficult decisions are necessary, and this may be that…as much as it may hurt. But this governor needs to tread VERY carefully with this issue lest she throw out the economic development baby out with the bathwater.