Arizona is rapidly shedding its old reputation as a relatively affordable place to live, with a fresh analysis showing the state sliding toward the bottom of national affordability rankings. By 2025, modeled Arizona families were spending about $19,300 more per year on basic necessities than they did in 2019, according to the Common Sense Institute, with housing and utilities doing most of the damage. That kind of jump has shoved Arizona from the middle of the pack in 2019 to near the worst in 2025, leaving many households juggling delayed homebuying plans, stretched monthly bills and tougher tradeoffs around work, childcare and health care.
CSI's numbers: shelter costs top the list
On the institute's Arizona one-pager, shelter and utilities are the clear villains. Those costs rose roughly 59% between 2019 and 2025, which added about $9,012 a year to what a typical family pays, while groceries and child care also climbed by thousands. Common Sense Institute notes that estimated household income in Arizona did grow more than 33% over the same period, but the raises could not quite keep pace. The group calculates that households effectively lost about 3.8% of gross income to higher prices, based on a standardized modeled household that lets analysts compare states on an apples-to-apples basis.
Housing Is The Main Culprit
"Arizona was a fast-growing, affordable state to live in - that's changed now," Zachary Milne, CSI's senior economist and the report's author, told Phoenix New Times. Milne and other analysts point to national inflation and a pandemic-era housing boom that drove prices up everywhere, with Arizona's local housing shortages and hot demand turning a national shock into a lingering local headache. In CSI's ranking, the modeled Arizona household kept just under 20% of gross income in 2025, compared with a national average of about 24.7%.
Permitting and local rules slow new builds
CSI's two-page permit review found that Arizona has a crowded field of 106 permit-issuing jurisdictions, and that the average permit process tacks roughly 23 days onto project timelines, with some offices much faster or slower than others. The brief also shows that approval times track closely with overall project completion, so permitting delays tend to show up directly in higher costs and slower delivery of new homes. Those bottlenecks help explain why building activity still has not filled the state's housing supply gap, according to data in a permit brief from Common Sense Institute.
State policy response and local politics
State lawmakers have begun loosening some local zoning rules and setting up faster permitting tracks, although analysts caution that those moves address only part of the problem. Katie Ratlief, executive director of CSI Arizona, told KTAR that "I think the headline from this report is 'housing, housing, housing,'" and warned that "some cities and counties are approving permits so slowly they will never close their housing gap." Local reporting notes that bills meant to speed construction might help at the margins, but they will not erase years of underbuilding overnight.
What it means for people and policy
Economists say the worst of the inflation spike may have cooled nationally, but Arizona's higher price baseline is here for now, and the housing shortage means families are likely to feel the pressure for years unless construction ramps up. Coverage from outlets such as KJZZ underscores that the affordability rankings are not just abstract charts. For many Valley households, they show up as tighter budgets, postponed big-ticket purchases and tougher daily decisions. Without faster homebuilding, a lot of Arizonans can expect that squeeze to stick around.
