Is Your Phoenix Dream Home at Risk? How Water Restrictions Impact New Builds

Are new water restrictions putting your dream of a Phoenix home at risk? With Arizona's recent groundwater regulations reshaping the construction landscape, many potential homeowners and developers are facing significant hurdles. Here's what you need to know about how these water restrictions could affect new builds in the Greater Phoenix area.

Understanding Groundwater Restrictions in Greater Phoenix

In 2023, Arizona introduced historic groundwater restrictions impacting new residential developments in the Phoenix metro area, particularly in fast-growing suburbs like Buckeye and Queen Creek. These measures aim to ensure long-term water sustainability amid a prolonged megadrought affecting the Colorado River basin.

Key Restrictions Impacting New Builds

1. 100-Year Assured Water Supply Requirement: Developers must prove that their projects have access to a 100-year assured water supply. This rule primarily affects areas relying on groundwater, now considered insufficient to meet long-term demand projections.
2. Development Freeze in Groundwater-Dependent Areas: Construction is paused in regions solely dependent on groundwater, like Buckeye, where aquifers are projected to run dry within the next century.
3. Alternative Water Sources Requirement: Developers must secure alternative water sources—like recycled or surface water—to proceed with construction, adding complexity and costs to new projects.
4. AMA-Wide Rules: These restrictions apply to the entire Phoenix Active Management Area (AMA). If any part of the AMA is projected to experience shortages, development halts across the entire region.

Major Residential Projects Impacted by Groundwater Restrictions

1. Rio Verde Foothills Development

• Details: The Rio Verde Foothills community, a “wildcat” subdivision outside Phoenix, faced a water crisis after Scottsdale cut off its water supply. While a temporary solution was reached, the broader issue of unregulated development in water-insecure areas remains unresolved. The state legislature has yet to close the loophole allowing such developments, leaving thousands of planned homes in limbo.
• Impact: This case illustrates the risks of building in areas without assured water supplies and the ongoing debate over tightening development regulations.

2. Pending Residential Developments

• Details: Governor Katie Hobbs’ 2023 pause on water supply certificates for new developments reliant solely on groundwater has left several major residential projects in Buckeye and other fast-growing suburbs in limbo. Builders are unable to proceed with tens of thousands of planned homes.
• Impact: This has exacerbated the affordable housing crisis in the region, as developers struggle to secure alternative water sources or meet the 100-year assured water supply requirement.

The Controversial Litigation: What It Means for the Future

The Home Builders Association of Central Arizona (HBACA), represented by the Goldwater Institute, filed a lawsuit in February 2025 challenging these restrictions. Here's a breakdown of their key arguments:

• Lack of Legislative Oversight: The lawsuit contends that these restrictions were implemented without proper legislative approval or public input.
• Flawed Groundwater Modeling: Critics argue that the groundwater modeling assumes fixed well locations for the next 100 years, an unrealistic and restrictive approach.
• Unfair Impact on Developers: The lawsuit claims that the restrictions disproportionately impact residential developers, while industrial and commercial groundwater use continues largely unrestricted.

The lawsuit's outcome could reshape water management and development strategies in Phoenix, influencing everything from home prices to construction timelines.

What This Means for Homebuyers in Phoenix

If you're considering building or buying a new home in the Greater Phoenix area, here are key takeaways:

• Be Aware of Water Security: Ensure the property you're considering has a 100-year assured water supply. This could influence long-term home value and availability.
• Consider Existing Homes: With new builds delayed, existing homes may offer better security and stability.
• Stay Informed on Litigation Outcomes: The result of the HBACA lawsuit will significantly influence future developments. Staying updated can help you make informed decisions.
• Explore Alternative Locations: Some areas with diverse water sources may experience fewer restrictions, providing more flexibility in home options.

How Chelsey Hernandez Can Help

Navigating the complexities of Phoenix's real estate market—especially amid water restrictions—requires an experienced, local expert. Chelsey Hernandez, a trusted Phoenix Realtor with My Home Group Real Estate, is here to help you move in and move up with confidence.

Whether you're looking to buy, sell, or understand how these restrictions impact your plans, Chelsey provides expert guidance tailored to Phoenix's unique market landscape.

Ready to Find Your Phoenix Dream Home?

Don’t let water restrictions stall your homeownership dreams. Contact Chelsey Hernandez today to explore your options and secure your place in Phoenix's evolving real estate market.

Visit www.chelseyhernandez.com to start your journey.

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