LaPlante Appraisals' Blog

February 22nd, 2024 3:19 PM

A housing shortage has resulted in some cities and states to change zoning usages to allow for things such as Accessory Dwelling Units (ADUs). Instead of allowing one single family home on a plot, several cities have changed zoning to allow multi-family units (2-4units) or an ADU. In November 2023, the City of Phoenix changed zoning laws for R1-6 (Single Family Dwellings) to allow for Multiple Dwellings. You can read the details of the change on the city pf Phoenix Zoning Ordinances.  There are many different opinions about these new zoning changes. Just as with any change-there are always two sides to the argument.  

FOR ZONING CHANGES:
One pro is this change allows for multi-generational families to live on the same property with separate homes. Whether they are aging baby boomers or recently graduated college students, they can have their own house on the property while maintaining the feeling that they are not living on top of one another. 

Secondly, with the increase of inflation and the cost of living, people are now looking for 'side hustles' to make some extra cash. One of these 'side hustles' is investing in income producing properties such as: Air BnB or VBROs. With the opportunity to live on the same property and build another home for income producing purposes, Phoenicians can have additional supporting income. 

AGAINST ZONING CHANGES:
With increased buildings and populated lots, there are some potential problems. Due to sewer, water and electrical lines not built to support 1-4 dwellings on an individual lot, these utilities are at risk. Utilities were designed to service single family homes, however with a change in zoning allowance, utilities will need to be upgraded thus increasing taxes or utility bills to accommodate. 

Another thought is that although having multi-generational living situations sounds wonderful, there will be a time when large developers will come in to buy out these multi-generational properties. Homes that need rehabilitated will be bought out by developers who have the cash to do so. They will likely tear down the existing dwellings and build multi-dwelling units. Developers have the money to do so, which in turn will lead to tearing down current residential homes to build larger multifamily complexes.

Finally, these zoning changes will impact lending. When a home is zoned single family, banks have various loan options available. Payments are spread over 30 years, buyers can put down 3.5%, and there are lower interest rates due to 'risk' assessment. However, once a property is zoned for 5+ units, it becomes a commercial property. A commercial property requires higher interest rates, increased down-payment and more requirements to secure a loan. Therefore, making it more difficult for the average Phoenician to buy a house when competing again developers with larger pocketbooks. 

Whether you agree or disagree with these zoning changes, it is important to know both sides of the argument. LaPlante Appraisals strives to educate the public on Appraisal related topics. No matter if you are an investor, developer, homeowner, or future homeowner, these changes can impact you directly.

Posted in:Construction and tagged: additionzoning
Posted by Kari LaPlante on February 22nd, 2024 3:19 PMView Comments (2)

Subscribe to this blog

Recent Posts:

Archives:

Categories:

Appraisal Industry (1)
Building (1)
Construction (1)
Financing (1)
General (5)
Real Estate Industry (1)
Zoning (1)

My Favorite Blogs:

Sites That Link to This Blog: