November 14, 2025
Author: Nicole Newhouse (Executive Director, AZHC)
Arizona’s housing crisis is deepening. Even with some recent price stabilization, the cost of buying a home remains far out of reach for many working families. Mortgage rates continue to hover above 6%, supply remains tight, and the number of affordable, entry-level homes is far below demand. Arizona’s homeownership rate hovers around 68%, which places it near the national average, but far below states like West Virginia and Delaware that exceed 75%. [9] Meanwhile, states with the lowest homeownership rates—including California and New York—struggle with extreme housing shortages and affordability barriers. [9]
Arizona’s homeownership rate is average—but affordability pressures are soaring.
Arizona’s map tells a story of contrast—urban renters, rural owners, and a shrinking middle. Where housing costs climb and short-term rentals spread, homeownership slips further out of reach.
Spotlight: Arizona’s Great Homeownership Lockout
In Arizona today, the dream of owning a home feels further away than ever. For too many families, it feels outright impossible. What’s creating this ‘lockout’? It’s not just one thing. It’s everything, all at once.
On the supply side, we’re facing a freeze. Homeowners with ultra-low mortgage rates are staying put, which means fewer homes on the market. And while builders are working, we’re still not seeing enough new homes in the price range first-time buyers need.
On the demand side, the roadblocks start early.
- Rent keeps climbing—averaging over $1,500 for a two-bedroom in Phoenix—making it hard to save.
- Childcare costs more between $11,000 and $14,000 a year. (Tootris News and Education Center)
- A typical down payment now hovers near $40,000. For young families, that’s a mountain too high to climb. (New American Funding)
Even if buyers manage to scrape that money together, they’re still facing steep monthly payments. Mortgage rates near 7% and home prices that haven’t cooled off much since the pandemic are forcing homeownership out of reach.
The effects are showing up in the data. Across the country, only 21% of recent home purchases were made by first-time buyers—the lowest share on record. And the median age of a first-time buyer? Forty. An all-time high. For many, owning a home isn’t happening in their 20s or even 30s—it’s being delayed by decades. (National Association of REALTORS® 2025 Profile of Home Buyers and Sellers)
Arizona is at a crossroads. Without action to increase supply and reduce financial barriers, the “Great Lockout” will define the next generation of housing in our state.
In response, policymakers across the country—and here in Arizona— are testing bold new ideas to expand access to homeownership. These reforms share a common thread: making it easier to build more housing, faster, and helping buyers afford it.
To better understand the tools at our disposal, it helps to distinguish between supply-side and demand-side strategies. Supply-side policies aim to increase the total number of homes by making it easier, faster, and cheaper to build. These include zoning reforms, streamlined permitting, and incentives for infill development. Demand-side policies, by contrast, help buyers directly—through down payment assistance, mortgage subsidies, or shared-equity programs. Experts widely agree that the most effective housing strategies combine both approaches, ensuring that new supply is met with support for those trying to access it. [7][8]
Across the U.S., several states have recently enacted reforms to make homeownership more attainable:
- Montana passed a sweeping set of zoning laws in 2023 requiring cities to allow duplexes and accessory dwelling units (ADUs) in single-family zones and streamlining permitting processes. [1]
- Florida launched the Live Local Act in 2023, combining over $700 million in workforce housing funding with zoning reforms that allow residential construction in commercial zones. [2]
- Texas introduced bills to restrict cities from mandating large minimum lot sizes or banning multifamily housing in commercial areas, aiming to make it easier to build smaller, more affordable homes. [3]
Spotlight: Florida’s Live Local Act—A Bold Housing Reform with Bipartisan Support
Florida’s housing crisis has made it hard for many working people to find a place they can afford. In 2023, the state passed a law to help fix that—the Live Local Act. This bold new law is changing the way cities handle housing, especially for people with moderate incomes like teachers, firefighters, and healthcare workers.
The Live Local Act makes it easier to build affordable apartments and condos. It says that if a builder puts 40% of their units at affordable prices (for families earning up to 120% of the area’s median income), then cities must allow the project—even in areas zoned for businesses or shopping centers. Builders also get help with property taxes and can build taller or more dense housing in these zones.
So far, this new law has inspired action. More than 89 new housing projects have been proposed across the state using the Live Local Act rules. These projects are expected to create over 3,100 affordable homes, mostly in places like Miami-Dade and Orange County. Examples include the Catchlight Crossings development near Orlando and HueHub Midtown in Miami—both are mixed-use communities built near transit hubs.
But not everyone is on board. Some local governments have pushed back, saying the tax breaks could hurt city budgets. Others worry the law takes too much control away from local planners. Some cities like Seminole County and Winter Park have opted out of parts of the law.
Still, the Live Local Act is seen by many as a big step forward. It shows how state leadership and investment can drive change. Florida is proving that with the right mix of rules and incentives, we can build more housing where people need it without waiting for perfect conditions.
These efforts reflect a bipartisan understanding that housing supply and affordability are interlinked.
The goal is to allow more flexibility in land use and lower the cost of building homes.
We can’t fix homeownership access with supply or demand alone. It takes both.
Arizona is catching up. In 2024, Arizona passed two major zoning reform bills:
- House Bill 2720 legalized ADUs in cities with populations over 75,000, allowing up to two units per single-family lot with minimal local restrictions. [4]
- House Bill 2721 enabled “missing middle” housing—such as duplexes, triplexes, and fourplexes—in targeted areas like downtown corridors and large new developments. [4]
In parallel, the state is helping buyers directly. The Arizona Is Home program provides down payment and closing cost assistance for first-time buyers earning up to 120% of area median income. With a total of $18 million in funding from federal and state sources, the program is expected to assist over 1,000 households across Maricopa and Pima counties. [5] Beyond the financial assistance, the program also connects participants with counseling and education to ensure long-term stability in homeownership.
Programs like Arizona Is Home connect first-time buyers to real support.
The significance of this approach cannot be understated. By addressing both supply and demand, Arizona is laying the groundwork for a more balanced housing market. Research shows that coupling supply-side reforms with targeted buyer support results in more equitable and sustained homeownership outcomes, especially in markets facing prolonged affordability gaps. [7]
The 2025 session introduced new ideas, too. The Starter Homes Act (SB1229) sought to eliminate costly design mandates and large lot-size requirements that often make new homes unaffordable. The bill proposed capping minimum lot sizes at 3,000 square feet in larger cities and preventing requirements like garages, masonry fences, or specific roof materials. [6] While it passed the Senate, it stalled in the House amid opposition from municipalities concerned about losing control over local development standards. [6] The League of Arizona Cities and Towns raised concerns about a potential one-size-fits-all approach and proposed alternative ideas like owner-occupancy requirements and incentives for cities to voluntarily adopt higher-density zoning.
This tension between state policy and local control is not unique to Arizona. In states like California and Washington, similar debates have played out over the balance between enabling more housing and respecting local planning authority. However, the emerging national consensus suggests that some level of state leadership is often necessary to overcome inertia and ensure all jurisdictions do their part.
Why Zoning Matters
Zoning laws dictate what kind of housing can be built where. In many cities, zoning codes heavily favor single-family detached homes, often on large lots. These rules were designed decades ago for a very different era and have unintentionally contributed to today’s affordability crisis. When developers are only allowed to build large homes on large lots, it limits the total number of homes and pushes up prices.
Relaxing zoning to allow more housing types—like ADUs, townhomes, and duplexes—is a proven way to add more units without transforming neighborhoods overnight. These so-called “gentle density” strategies increase supply while preserving neighborhood character. They also provide options for multigenerational families, seniors looking to downsize, and younger buyers entering the market.
Arizona’s 2024 reforms are a step in this direction.
HB2720 and HB2721 don’t force cities to allow high-rises everywhere—they simply require cities to legalize small-scale infill housing in targeted locations. These changes won support from a broad coalition, including affordable housing advocates, homebuilders, and some local officials who recognize the scale of the problem.
The lessons from other states reinforce the value of pairing zoning reform with investment. Florida’s Live Local Act combines regulatory changes with hundreds of millions in new funding. Montana’s reforms were paired with statewide education campaigns and implementation support for cities. Texas is focusing on reducing regulatory burdens while also opening up more land for development. Each of these states is approaching the challenge from a different angle, but they share the recognition that the status quo is unsustainable.
Arizona has also taken steps to align planning and housing goals. For example, recent legislation encourages municipalities to inventory underutilized land and streamline approval processes for affordable housing. There is also growing interest in adaptive reuse—turning vacant commercial buildings into housing—as a way to meet demand without expanding the urban footprint.
Opportunities Ahead
Arizona has made meaningful progress, but much work remains. Here are some next steps the state could consider:
- Expand the Arizona Is Home program statewide. Right now, the program is focused on Maricopa and Pima counties. Additional funding and outreach could extend benefits to rural and smaller communities, where housing needs are also acute.
- Support cities in implementing new zoning laws. Technical assistance, grant funding, and planning resources can help municipalities update their codes and communicate with residents about the benefits of ADUs and missing middle housing.
- Explore partnerships with employers. Employer-assisted housing programs can help key workers—like teachers, nurses, and first responders—live closer to their jobs, boosting retention and reducing commute times.
- Promote community land trusts and shared equity models. These tools can ensure that affordability is preserved over the long term, especially in fast-growing areas where market pressures can quickly erode gains.
- Revisit and refine the Starter Homes Act. The bill’s ideas are sound: allow smaller homes with fewer costly requirements. With further input from local leaders, a new version of the bill could find broader support and move forward in future sessions.
Conclusion
The path to affordable homeownership is complex, but not impossible. Arizona is beginning to take the kinds of steps that other states have used to expand access and reduce costs. By aligning zoning, financing, and support for buyers, we can make homeownership a realistic goal for more Arizonans.
Housing policy is often viewed through a partisan lens, but the reality is that affordability affects everyone. Whether you’re a young family trying to buy your first home, a retiree hoping to downsize, or a teacher looking for a place near work, the need for more housing options is universal.
Arizona can lead with pragmatic, forward-looking solutions that honor local knowledge while ensuring statewide progress. With continued collaboration, smart investment, and clear-eyed reform, we can widen the path to homeownership—and ensure that more Arizonans can walk it.
Sources:
[1] M. E. Brady, “Montana’s Housing Crisis Fix Survives Constitutional Challenge,” State Court Report, March 19, 2025. [Online]. Available: https://www.statecourtreport.org
[2] Florida Senate Bill 102 (Live Local Act), 2023. [Online]. Available: https://www.flsenate.gov
[3] Texas Senate Bill 15 and Senate Bill 840, 2023 Legislative Session. [Online]. Available: https://capitol.texas.gov
[4] Arizona State Legislature, House Bills 2720 and 2721, 2024. [Online]. Available: https://www.azleg.gov
[5] Office of Arizona Governor K. Hobbs, “Governor Katie Hobbs Expands Homeownership Opportunities for Arizonans,” August 5, 2025. [Online]. Available: https://www.azgovernor.gov
[6] Arizona State Legislature, Senate Bill 1229, 2025. [Online]. Available: https://www.azleg.gov
[7] J. Hickey et al., “Housing Affordability and Supply Challenges in the U.S.,” Urban Institute, 2023. [Online]. Available: https://www.urban.org
[8] C. Kneebone and D. Rhoads, “Aligning Housing Supply and Demand: Best Practices for States and Cities,” Brookings Institution, April 2024. [Online]. Available: https://www.brookings.edu
[9] U.S. Census Bureau, “Quarterly Residential Vacancies and Homeownership, Second Quarter 2025,” July 2025. [Online]. Available: https://www.census.gov