FLAGSTAFF, Ariz. — Unit 203 has a story to tell.
The small studio apartment connected to an east Flagstaff housing complex reveals why the short-term rental market creates winners and losers, and why there is no easy fix.
Unit 203 was home to Marvin Pierce, a transplant from Louisiana for seven years. Then in 2022, a Valley real estate developer found an opportunity in the aging single-story apartment complex. The company purchased the property and carried out major renovations.
Unit 203 became a short-term rental and Pierce became homeless.
“One of my neighbors had been there 8 years, another 11. It was heartbreaking for all of us,” Pierce said, looking back nearly two years later.
Today the 55-year-old still lives in his car and says he can’t find an affordable apartment.
“It reminds me of the Israelites, always on the move,” Pierce said.
Former resident of unit 203 remains homeless
Pierce works at a Flagstaff barber shop, takes showers at a truck stop, and often eats at a food kitchen. He parks his car in lots and campsites. Although he says he has yet to find a decent rental for under $2,000 per month, a quick Zillow search shows there may be a couple of options that would fit his budget.
But that may not matter because Pierce is focused on another option right in front of him: He is at the top of the waiting list for the city’s Section 8 affordable housing program after applying more than a year and a half ago.
“I have a final meeting later this month. I’m hoping for the best,” he said.
Owner of apartments say complex needed renovations
On a recent weekend, a Phoenix family of three stayed in Unit 203. They were visiting Flagstaff during a high-travel weekend and told 12News they paid $340 a night for the rental. The complex is called Venture at Route 66 and is owned by real estate development company Neighborhood Ventures. General partner Jamison Manwaring said when his company purchased the apartments, they invested about $40,000 into each unit.
“We went in and bought the property from the previous owners who weren’t able to do some major renovation and plumbing,” Manwaring said.
Manwaring says the complex is available for both long-term and short-term rentals. When asked how many of the units are currently rented out on a long-term basis, Manwaring said he could not give a number.
He said although the history of 203 may be viewed as a reflection of how the short-term housing market impacted Pierce, it’s not that simple. He points to growing demand for all kinds of housing in Flagstaff, including vacation rentals due to Arizona’s population growth.
“When people from Phoenix want to get up to Flagstaff, they don’t have a place to stay. If you say the short-term rentals are taking the long-term rentals away, then we need more units all around,” Manwaring said.
Housing problem goes beyond short-term rentals
Of course, one industry trend does not explain the entire housing problem.
An apartment complex under construction across the street from Venture at Route 66 shows why it’s complicated.
David Carpenter’s company, Hope Construction, is building the complex. Carpenter has been building duplexes and triplexes in Flagstaff for 20 years and has served on the city’s planning and zoning commission.
The apartment complex will likely rent for $2,200 per month for one or two bedrooms. Carpenter says he believes zoning restrictions and higher construction costs have prevented contractors from building smaller-sized, cost-effective apartments.
“The impediments are the cost of construction, the borrowing of money, the availability of land and the rules and regulations in the city related to higher density housing,” Carpenter said. “I’m trying to get the rules changed at the city to build an affordable housing project. My dream is to build smaller apartment complexes, referred to as micro-units. We are working with the council.”
Cities like Flagstaff have their hands tied
Flagstaff City Councilman Jim McCarthy said the short-term rental craze worsens the city’s affordable housing shortage because it reduces inventory. The city has no authority to limit the number of short-term rentals and has lobbied state legislators to give them more authority to regulate the industry.
“About one in four residential properties are owned by people who don’t live here and that’s a problem,” McCarthy said.
McCarthy, a landlord himself, says it’s too tempting for some local property owners to convert homes and complexes into short-term rentals.
“I continually get in the mail offers telling me I should kick out my renters and use it as a short-term rental, in effect a hotel in a neighborhood,” McCarthy said.
City of Flagstaff taking steps to address housing
In 2020 the Flagstaff City Council declared a housing emergency and adopted a ten-year plan. Flagstaff voters also passed a bond to financially assist first-time homebuyers.
“We’re doing as much as we can,” McCarthy said.
The city reports there are more than 2,200 households on the Section 8 waitlist.
“While difficult to measure, the conversion of existing housing units into short-term rentals further complicates the housing shortage Flagstaff and many other communities around the country are experiencing,” said city spokesperson Sarah Langley.
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