Arizona was ranked among the least affordable states in the nation, according to a new report from the Common Sense Institute.
Across Arizona, household costs have increased faster than national costs. Since 2019, Arizona households have had to spend about $19,300 more on essential expenses per year compared with the national average of $15,400.
Housing costs continue to be the largest driver of affordability challenges due to slow permitting and a dramatic increase in demand, the institute said.
“While inflation has eased in recent months, CSI’s analysis shows that the total increase in prices since the pandemic is still outpacing income growth, leaving households in Arizona and across the country with less purchasing power and tighter budgets,” according to the press release from April 14.
How does Arizona rank in terms of affordability?
Arizona ranks as the seventh least affordable state in the country. Rapid population growth and strong housing demand have driven up the cost of living.
“Inflation reports may show things are cooling, but that doesn’t mean life is getting more affordable for Arizonans,” Zachary Milne, senior economist at the institute, said. “Our analysis shows the cost of everyday essentials is still significantly higher than it was before the pandemic, and for many families, incomes haven’t kept pace. That gap is what continues to drive the affordability challenges we’re seeing across Arizona today.”
Arizona households retain about 19.6% of gross income, which is roughly $1,700 per month. The national average is 24.7%, or about $2,170.
Arizona cost increases
Here are the cost increases by category from 2019-2025 that the Common Sense Institute identified:
- Shelter and utilities: +$9,012 per year
- Child care: +$3,950 per year
- Groceries: +$3,375 per year
- Car insurance: +$1,355 per year
- Health insurance: +$1,302 per year
- Gasoline: +$313 per year
Shelter and utilities costs in Arizona rose 59% between 2019 and 2025. This was the fourth-largest increase among all states.
What is the Common Sense Institute?
The Common Sense Insitute, which claims to be a nonpartisan research organization that protects and promotes the economy, has frequently been labeled a conservative think tank. It was founded by two firms associated with Republicans and mostly run by them, except for a few conservative Democrats. Although the nonprofit does not disclose its donors, the ones shown on tax filings include the Adolph Coors Foundation (2019) and the Atlas Economic Research Foundation (2019), which are known to support conservative groups.
How did the study measure affordability?
For each state, the Common Sense Institute constructed a “modeled household” or standardized four-person household which consisted of two adults working full-time at the state’s prevailing median hourly wage. The household’s income was then compared with the total cost of the essential expense basket, which included estimated income taxes. The six core household necessities or expenses they listed include shelter and utilities, groceries, health insurance, car insurance, gasoline and child care.
States were ranked based on the “financial flexibility remaining” or the amount of money left over to cover other essential and nonessential spending, savings or unexpected costs.
Reporting by Dina Kaur, Arizona Republic
