The history of Payson's housing market isn't unlike a game of Monopoly.
Before 1973, the year of incorporation, Payson was a blank board.
It had few utilities, inexpensive land and housing for the town's 2,000 or so residents, and with a two-lane highway from the Rim Country to the Valley, it was considered remote.
As more people entered the game, landlords bought property and placed houses, hotels and warehouses on the once-inexpensive "Mediterranean Avenue" while utilities imposed taxes, development and impact fees across the board.
By 2006, housing prices turned "Mediterranean Avenue" into "Boardwalk," squeezing out the moderately priced accommodations of "Marvin Gardens."
Now, more than 30 years later, with a shortage of affordable housing, Payson's workforce can't get out of economic jail.
The next stage of the game
Most local experts say the problem stems from a convoluted mix of public sentiment, land availability, zoning, population, migration, politics and, of course, economics.
Jerry Owen, the Town of Payson's community development director, leans back in his chair, the sleeves of his blue oxford rolled up to his elbows. He laces his fingers behind his head.
Blueprint-sized maps of Payson's zoning areas and subdivisions lie on the conference table in front of him.
He shakes his head.
"I can't say I've got this fully figured out," he said. "There are so many moving parts."
On Dec. 3, 1973, Payson -- then a municipality of 12 square miles -- incorporated.
Former Mayor Craig Swartwood, now a Realtor, sold his first lot in the mid-1970s for $4,000, and a 600-square-foot home for $16,900.
Lifetime Payson resident Duke Wilbanks remembers it, too -- a time when the Tonto National Forest surrounded a smattering of homes.
"It used to be a four-street, rancher community," Wilbanks said. "You would go to the post office and it took you a while because you ran into everyone you knew. By the mid-'80s, you hardly knew anybody."
That's when Payson experienced its first growth spurt.
In the early 1980s, three federal land exchanges increased the boundaries of Payson while another swap, Payson 4, gained momentum.
Then, in 1988, Congress passed the Federal Land Exchange Facilitation Act.
This legislation changed the appraisal process, adding expense and bureaucracy to the price of acquiring federal land, so the money went elsewhere.
"The developers said they couldn't afford it," said Bob Flibotte, a 14-year member of Payson's planning and zoning commission. "The result of that is we didn't get any of that land. You had decreasing supply."
In the 1990s another land exchange, the Knolls 2, fell apart, said Walt Thole, Forest Service Recreation and Land Staff officer.
"That was looked at for about six years," Thole said. "For many years the community wanted to grow. The Knolls died because of water issues and a lot of resistance to seeing that land swapped."
Affordable, but not for long
But still, Rim Country property fit within blue-collar budgets.
Rick Croy, Payson Town Council candidate and the president of Payson Regional Housing Development, said back in 1991 he purchased a two-bedroom, two-bath site-built home on a quarter-acre of horse property with its own well in Diamond Point for $68,000.
But it wouldn't stay that way.
From 1995 to 2000, the median price of a site-built home in Payson increased 73 percent according to figures provided by real estate broker, Cliff Potts.
As housing outpaced income, communities such as Star Valley served as cost-effective alternatives for Payson's working class.
"We used to have safety valves where it was cheaper to live, but that's not the case anymore," Flibotte said.
For the past decade, a confluence of local policy, national economy, improved infrastructure, and basic supply and demand flooded the Rim Country.
In October 1996, the town council passed ordinance 480.
It established the 20 equivalent residential unit (ERU) rule and imposed a $3,785 water development fee per unit.
"Twenty ERUs was designed to limit development and keep it in alignment," Owen said. "It's aggressive. You won't find anything else like it in the state."
Developers building a subdivision with fewer than 20 units could absorb those fees, and tap into the town's water system.
But subdivisions comprised of more than 20 units required a water source.
The ERU code, according to many in the building industry, created inefficient land management and overconsumption of already-scarce acreage.
"This 20-unit thing has been the killer," Flibotte said.
"If you can only have 20 ERUs," said longtime Payson resident and Realtor Michael Hughes, "you're wasting land."
For instance, if a landowner wanted to subdivide 35 1-acre parcels to fall under the 20 ERU rule, that developer would have to put one unit on 1.75 acres -- low-density zoning.
And in Payson, low density, one to 2.5 dwellings per acre, means higher prices.
How density works
A recent search of realtor.com located a 1.72-acre lot in southeast Payson with a list price of $149,000.
"That's the cheapest you're going to find," said Potts.
Split the lot in half and each parcel would cost about $75,000.
Using figures gleaned from Arizona State University's Arizona Real Estate Center March 2006 housing report, the median square footage of a single-family home was 1,615 square feet.
To build a house at approximately $150 a square foot, estimated developer Michael Horton, would yield two houses at roughly $317,250 each.
Now, slice that same 1-acre property six ways to create a high-density project -- 5.5 to 18 units an acre according to the town's general plan.
At that rate, land expense decreases to $12,500 per lot.
And attached housing, such as townhomes, which have a median square footage of 1,095, adds value, Horton said.
Shared plumbing, walls and other amenities shave expense, but even if the cost per square footage stayed the same, the housing unit would ebb to about $176,750.
As the town, the developers and the community worked out density issues toward the end of the century, interest rates dropped to all-time lows, allowing consumers to purchase more house for their money.
This phenomenon, according to Croy, created excess demand for housing and because people could afford to buy more, tapped into the supply.
The shortage that resulted
The result was a shortage of shelter for working-class and first-time buyers.
As interest rates continued to fall, the dotcom industry thrived.
"When it first started coming online, people said it would ruin our business," Hughes said. "But it's actually made it better."
Readily accessible housing data -- historically limited to licensed real estate agents through the Multiple Listing Service -- armed potential homebuyers with detailed information.
"When they come here, they already have a pretty good idea of what it costs," Hughes added. "As a result, we do a lot of advertising on the Internet."
Consumers from cities such as San Francisco, where the average house goes for $689,000 according to federal statistics, fled or cashed in.
"They could sell out and have a (cost of) living standard that is half here what they had there," Croy said. Meanwhile, Arizona's population swelled.
Between 2000 and 2005, Arizona ranked among the top-three, fastest-growing states in the nation, reported the U.S. Census Bureau. As people moved in, others, overwhelmed by the prices, the traffic and the heat of the Valley, sought refuge.
Payson, Croy said, buzzed among the perspiring residents of the Valley and the shivering snowbirds of the northeast United States.
And the new, four-lane Beeline Highway, completed in 2001, made it that much easier.
"Before that, the Beeline was 55 mph the whole way, and there was a lot of RV traffic on a two-lane highway," Croy said.
As the housing boom of 2005 flutters into 2006, Owen said the number of working-class residents living beyond their means and paying more than 30 percent of the household's income will continue to increase.
And, though the inexpensive houses are out there, said appraiser Mike Foil, their occupants aren't budging.
"I believe there are a lot of residential properties in Payson that are affordable and have a market value under $170,000," Foil said. "It's just that they aren't for sale."
Community support goes a long way when it come to building shelter that teachers, nurses, firefighters and the young, working class can afford.
"Who wants to live in a community where you can't get those services?" Owens said. "If everybody wants big lots and expensive homes, the squeeze on the workforce gets greater and greater. Without the workers, the local economy suffers."
Week 3: How do retirees fit into the Payson affordable housing equation?
Week 4: Why does it matter if there is no affordable housing?
Week 5: Solutions
Week 6: Community round table. Open to the public. RSVP to (928) 474-5251, ext. 115.
See related story:
Work force being priced out of Payson (April 28)