'Prices are horrendous': Bisbee struggles as housing prices soar in historic town

Bisbee residents will be the first to say how much they love living in their city. However, they will also be quick to add that housing in their lovely, quaint, historic city is quickly becoming unaffordable and options are disappearing.

Nestled in southern Arizona's Mule Mountains, Bisbee has quickly become a tourist attraction and was voted USA TODAY's best historic small town in 2016.

As word got out over the years about Bisbee's fun and open-minded atmosphere and its distance from the bustle of big city life, people began to settle in Bisbee.

However, during the COVID-19 pandemic, Bisbee's housing market erupted with house prices soaring and rental prices increasing. Since then, housing options have almost disappeared as people from out-of-town flushed with cash purchased houses there.

Mayor Ken Budge said Bisbee is primarily a tourist town, but for many of the town’s service and low-wage workers, Bisbee is becoming more unaffordable.

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Dale Morris, who works at Café Roka on Main Street, said he noticed rental prices started increasing right before the start of the pandemic.

“Probably a year or so before COVID, it started to get worse,” he said. “You used to be able to find a house to rent for $500 per month. I’m barely able to afford the house I’m living in for $900 per month.”

Morris moved farther out of town to the Saginaw/Lowell area, neighborhoods on the other side of the former Copper Queen mine.

While Saginaw is an eight-minute drive from downtown historic Bisbee, often called "old Bisbee," it can take about a 45-minute walk down the serpentine road that borders the mine and connects historic Bisbee with its other neighborhoods.

Morris was previously homeless and qualified for funding through Rapid Re-Housing, a statewide federally funded program that offers housing assistance to people in need.

Morris said he received funding for rent that will last for nine months. He is also on a waitlist for low-income housing, however, it often takes years to get off the list, according to housing advocates. Morris said he has been seventh on the waitlist for two years.

The owner of Café Roka Rod Kass said housing issues affect his ability to staff his restaurant. As people move farther out of town for more affordable housing options, transportation issues can sometimes make it difficult to get to work.

“It’s definitely an issue. Staff struggles to find housing in town,” Kass said, adding that in the past his employees could walk to work or get a ride, but many of his employees have had to leave Bisbee‘s center for more affordable housing options.

'It was the perfect storm'

Jay Matchett, the executive director of Cochise Housing Connection, a housing nonprofit, said the housing affordability issues began around the start of the pandemic when young people wanted to escape cities to smaller towns.

“It was the perfect storm,” he said of Bisbee’s housing crisis. “There are people that can afford a second or third home and they don’t need to recoup any income from it because they paid in cash and they own it outright, or the interest rates were so low.”

Many of these houses that were bought as vacation homes or second homes, and remain empty for most of the year, could have been rented out by local residents, he said.

“Previously that would have been someone living in the community or a rental," he said, noting a large income disparity in Bisbee. "There’s people with a lot of money and there’s people that have no money.”

In 2020, the census showed 45% of Bisbee's population made less than $35,000 per year, with 15% of those making between $15,000 to $25,000 annually. Census data also showed the typical income of Bisbee residents is $38,467.

According to the most recent census data, in 2020 Bisbee had an estimated 2,645 occupied homes and 894 vacant homes, 25% of the city's total number of homes.

At the end of June, The Arizona Republic spoke to Karen Brooks, a real estate agent with Bisbee Realty Inc. At the time, there were only 24 listings for the entire Bisbee and Naco area, which included old Bisbee and its surrounding neighborhoods such as Warren and San Jose among others. Naco is a small town south of Bisbee along the border with Mexico.

Many Bisbee locals cite vacation rentals as a culprit to the housing issue. At the time this article was published, on Airbnb's website, there were 162 rentals listed in Bisbee, and on AirDNA.co there were 183 vacation rentals listed on both Airbnb and VRBO vacation rental websites.

Mayor Budge said with many homes used as vacation rentals, they are not available for long-term renters.

Tourism “requires a lot of service employees who used to always be able to live in town simply because there were a lot of lower income houses,” Budge said. “A lot of those homes have been bought (as) second homes. They've been turned into Airbnb (rentals). A lot of the long-term rentals have disappeared.”

Blaming vacation homes does not tell full story

Matchett, however, said blaming Airbnb rentals does not tell the full story.

He reiterated that while Airbnb (rentals) are an easy target, they are not the only cause of the decrease in housing options. He blamed second homes, or vacation homes that remain empty for most of the year as the leading culprit.

With tourism as one of Bisbee’s primary economic activities, Airbnb rentals help fill a demand that the few hotels cannot always meet, Matchett said.

He sees this every day when he leaves his house to go to work. Several neighbors on his block do not live in town.

“They have decent jobs somewhere else, and they come down for a week or a weekend a few times a year, sometimes more,” he said.

Matchett said last fall one of his neighbors was kicked out of her previous apartment building when it was bought by Vanguard Ventures LLC with an address in Scottsdale, Arizona.

“All of a sudden she was without housing. She was lucky enough that she had help from her family, and she was able to find housing,” he said. “It was very dicey for a while there. She could not find a place. There were no places available at that moment.”

Katie Huthoefer, a manager at Le Cornucopia Cafe, on the main street in Bisbee’s historic neighborhood, blamed vacation rentals for the housing crisis.

“The Airbnb (rentals) are killing us,” she said, adding that she lives in a four-bedroom house and wanted to downsize to a smaller place after some life changes, but she could not find any affordable places to live.

“I’m living in a big place for four people. I’m grandfathered in,” she said.

With so little affordable options, finding a place to live can be challenging for those most vulnerable.

Matchett explained how close to homelessness many people can be. While low-income renters might have housing, often “they can barely hang on to it,” he said.

For example, renters might be just one setback away from homelessness. Matchett said anything preventing someone from working, like getting a flat tire and not being able to drive to work, or having to take care of a sick child, could put them in a precarious situation.

Strong demand, too few homes

Real estate agent Karen Brooks with Bisbee Realty Inc. said during the 10-year period before the pandemic, the market was “dead” following the 2008 housing crisis. Then two years ago prices and the number of listings exploded.

“Prices have gone out of control and there is hardly anything available,” Brooks said. When she spoke to The Arizona Republic at the end of June, there were three new listings, two were just land for sale.

“Prices are horrendous. Most people who live here could never afford anything,” Brooks said. “A house that used to sell for $98 (thousand) is selling for $250 (thousand).”

Two years ago, Brooks said she saw 190 listings of homes for sale on any given day, but recently that number has plummeted.

“Every single day, we were listing and selling and now it’s more weekly... for two years we were exhausted,” she said, adding that everyone involved with the selling of homes felt the uptick in house buying from title companies to inspectors and repair people.

The crisis in Bisbee, is not unique to Bisbee, but stretches across Cochise County and the state.

University of Arizona Economist George Hammond said data shows housing affordability is significantly lower (83%) in Cochise County compared to where it was before the pandemic began. The decline is similar across the state, with Phoenix having the largest decline, Hammond said.

Referencing data from the Federal Housing Finance Agency, Hammond said single-family house prices were up 23.5% in the first quarter of the year in the Sierra Vista metropolitan area, which includes Bisbee. This is higher than the national average which sits at 19.4% and slightly lower than Tucson at 25.2%, Phoenix at 30.1%.

Hammond said the cause of the affordability and scarcity issues is supply and demand. Arizona is seeing many new residents from other states.

“A large share of the population is moving into its prime first home-buying years and we add to that the impact of the pandemic, increases in remote work, the redistribution of the population across the state and across the nation,” he said.

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He said that while people are moving to the state from all over the country, larger numbers of people are moving to Arizona from Southern California.

He highlighted the drop of inventory that has been happening over the decade and increased during the pandemic.

Hammond also noted that many single-family homes are being bought by investors as rentals.

Hammond said home sales are slowing down and should continue to slow through the beginning of next year as interest rates rise.

“The demand will still be there. I think we will see a slowdown in both population growth and housing as we come out of the pandemic,” he said. “The surge in demand we saw in the pandemic is a one-time thing.”

Realtor says homes need more than paint and 'chewing gum'

Doris Turner, who runs her own real estate business in Bisbee called OK Realty described the rental and housing markets as scarce.

“In a way (Bisbee) is becoming somewhat emptier because some of the properties are not occupied all the time,” she said.

When Turner looked online at the listing prices, she found a 2-bed-1-bath with no private parking (a normal aspect of life in Bisbee) which would require a lot of repairs, selling for $259,000.

Many homes in Bisbee date back to when mining ruled the town, so houses are not often equipped with the most up-to-date appliances like dishwashers, or a typical  bedroom to bathroom ratio. Turner said that a 2-or-3-bedroom house will often just have one bathroom.

During one recent sale, Turner said she had a property inspector look at the house to determine the condition of the building, and what he found surprised her.

“Of the 55 inspections, 42 things he red-tagged,” she said.

Turner said old houses often have many issues people do not expect to deal with.

For example, she has seen bathtubs causing the ground underneath to crack, bad caulking jobs causing water to leak into the house and damage walls, wiggly faucets and rain damage to ceilings, among other problems.

Moreover, many homes do not have private parking. Also, because of the city's geography, often homeowners or renters have to park on the street and walk up many small stairs. Most residents know the number of steps it takes to get to their front door.

Sergio Saenz, who works part-time at a local olive oil store, said when he first moved to Bisbee, his home was a 106-step climb from street level.

Matchett, who runs the housing nonprofit, is lucky in comparison. His home is just 40 steps from street level.

How Bisbee is tackling housing issues

Bisbee’s mayor said he and the city council tackled the housing issue head on.

“We are trying to be proactive,” Budge said.

In December 2021, the city of Bisbee acquired Hillcrest Apartments, a 28,055-square-foot complex made up of three buildings that sits on two acres of land. The goal was to turn the building into affordable apartments. Before the building was used for housing, it was originally a hospital for the miners and their families who built Bisbee.

To turn the property into affordable housing, the city partnered with nonprofit La Frontera, a housing development company that focuses on low-income housing. However, the organization was not awarded the tax credits needed to conduct work on the building.

The city currently owns the property but has a purchase agreement with Hillcrest Estates. According to the city, a recent addendum to that agreement allows the city to market the property.

In another effort to add rental options, the city adopted an ordinance in March to allow accessory dwelling units to increase housing options.

“There’s a lot of homes, some in old Bisbee, most in Warren have little casitas and other things that could be used for long-term rentals,” Budge said, adding that any units under this category would have to be leased out for at least 30 days.

Budge said the most popular area to live is old Bisbee with its historic-looking houses on the mountainside, and its sea of bars, restaurants and stores.

“There is some housing in the other areas, but not necessarily as prominent as we need. The houses cost a little less, but rentals are scarce,” Budge said.

The city also began a workforce initiative, under which the city purchases derelict homes and partners with nonprofit Step Up Bisbee/Naco to remodel them. The homes are then sold at 20% below the lowest appraised market value of the house. The goal is to sell five or more homes a year, Budge said.

“It helps retain employees, it helps retain our medical people, our teachers,” he said, adding that the money made from selling the home will be put into the project so that it becomes self-sustainable.

In addition to the city's efforts to add affordable homes to the market, Matchett said his nonprofit is filling in the service gaps for those who are not homeless, but also cannot afford to buy a home.

“There’s nothing tailored towards people who are earning money, and not homeless, but they can’t afford full freight rent. The other thing is, we have a lot of seniors on fixed income who are being priced out and who are feeling it,” he said. “And right now, there are very few affordable housing properties that are not for seniors or people with disabilities.”

In 2020, 42% of Bisbee’s population was 62 years old or older, according to census data.

Since the nonprofit’s incorporation in October, the organization was awarded a grant to organize a monthly resource fair bringing together over 50 service providers to guide people to the services and help they need. This is part of the city’s efforts to curb homelessness, Matchett said.

His goal for Cochise Housing Connection is not only to provide housing counseling, but also to acquire and operate community housing, eventually becoming a community housing development organization.

These types of organizations are nonprofits that use federal funds administered by the state to develop affordable housing.

Currently, Cochise County has no community housing development organization.

Matchett noted that with better collaboration between Bisbee’s service providers, organizations could bring in more funding for low-income housing.

“There’s just not a lot of resources. Without outside dollars and assistance, there’s minimal things that can be done," Matchett said.

Kass, the chef at Café Roka, reiterated this issue.

“They (the city) just don’t have access to the funds as they do in an urban community,” Kass said.

This article originally appeared on Arizona Republic: Bisbee struggles as housing prices soar in historic town