Hosts Nicole Cox and Linda O'Bryon explore a key political issue facing the US: Housing affordability and availability. We hear from two experts from the University of Arizona whose research explores pathways to increasing housing affordability across the state of Arizona and the greater southwest region. We also check in with Wall Street Journal investing columnist Spencer Jakab for a macroeconomic look at the factors at play the housing market nationwide.
Nicole Cox: Homeownership, viewed by many as a symbol of financial success and independence, is frequently considered a key component of the American dream. If someone works hard and has the will to succeed in this land of opportunity, regardless of class, they can achieve prosperity and success. I'm Nicole Cox.
Linda O’Bryon: And I'm Linda O'Bryon. Thank you for joining us for Navigating Our Financial Times. As the gap between U.S. home prices and household earnings increases and the share of first-time home buyers is at a record low, what does this mean for home ownership in the U.S.? Is it transitioning to a luxury that is becoming increasingly out of reach?
Joining us to talk about the role of real estate and the housing market in the US economy is journalist Spencer Jakab, investing columnist at The Wall Street Journal, who writes the Daily Markets A.M .newsletter and author of “Heads I Win, Tales I Win,” and “The Revolution That Wasn't.” Thank you for joining us.
Spencer Jakab: Hey, thanks for having me.
NC: The housing and real estate sectors are a significant contributor to gross domestic product. What are some of the forces that will shape housing and real estate in 2026?
SJ: Well, a big force is what interest rates are, because housing is an investment that usually is financed. Although short-term interest rates have been coming down, there have been six rate cuts since late 2024.
Mortgage rates have not come down all that much. And that's because there are concerns about inflation, other technical factors. If those begin to come down, that'll affect it. But we're really in a unique period where mortgage rates stand because they were low for a number of years. And so that actually locked a lot of people into their existing homes, sort of kind of golden handcuffs. And that's created a scarcity of existing homes for sale. That inventory is fairly low. The turnover in the housing stock is fairly low.
And so, whereas, the interest rates and other things affect how many new homes are built, the turnover in the existing stock of homes also is affected by them, but not in ways that they have been in the past, because they were extremely low, historically low for so long.
LO: And speaking of demographics, only about 32% of 27-year-olds owned a home in 2024. And that compares to 40% of baby boomers when they were age 27. And that's according to the real estate brokerage firm Redfin. What are the factors that are making it difficult for young people to buy homes? And is there any sign that that might be changing?
SJ: Well, there are a number of factors. One that is not changing anytime soon is that young, college educated people tend to carry student loan debt. And so having that hanging over them, that makes it pretty difficult to take on an initial loan, just maybe perhaps by their credit rating, but also just their personal cash flow.
Another thing that makes it difficult is the number of homes that have been built. If you look at a long-term time series of home construction, of single-family home construction in the United States, it has not kept up with population growth. There was a big spurt during the housing boom, kind of 2003 through 2007. Then it cratered following the housing bust. You had a few years where really few homes were being built, but the overall number of homes versus the number of young people who would like to get on the housing ladder and have a house, single family house with a white picket fence or even a really modest home are mismatched.
And you can't blame macroeconomic forces for all of it because it's become more expensive to build a home because of zoning and regulation. So there's the number of desirable plots. So you could build a home in the middle of the prairie if you want, but building a home that's a relatively good commuting distance to where jobs are in a city where young people want to live is getting kind of expensive. And that's especially an issue in the last, let's say 18 months as you've had a lot of pressure on the workforce that is responsible for actually hammering in those nails, putting on the roofs and building a lot of those homes, which was overwhelmingly made up of immigrants, both people who are authorized to be in the country and people are not authorized to be in the country. And so as those people feel under pressure, they're still around, but there are fewer of them, yet you have this pressure to build homes and they happen to have gravitated towards that sector and you don't have a lot of people, native born people, going into home construction, not enough at least to substitute for the ones who have left or are concerned about being picked up in a raid or what have you.
NC: In 2025, we saw less people moving to other parts of the country to take jobs in other cities. Are we still seeing less mobility, due in part to people not finding affordable places to live, and what kind of effect is that having on the economy?
SJ: Yeah, I mean, it's more difficult to find a place to live, but if you're relocating to a different part of the country, then it's very likely that you already have a home somewhere and one thing that makes people hesitant to relocate is that they might be willing to sell their home, but they're not willing to give up their mortgage. They might've locked in a 2.8% interest rate on a 30 year mortgage when they refinanced their home. And so you live in Milwaukee and you have a home, and then you get a job offer in Chicago and like, I'd love to move, but not only is the home pretty expensive, but the mortgage is going to cost me more than twice as much in terms of the base interest rate. And I can't afford that, so I'm going to stay put. And so, perversely, this is a period of very low interest rates, which was a real kind of bonanza for homeowners in terms of locking in cheap mortgages and even taking some cash out.
The years kind of during and immediately after the pandemic has really helped to curtail housing mobility. And so, I think you had something like existing home sales last year and an annualized rate of 4.3 million, which is really historically low. It's about the same as it was in 1995, 30 years ago. So, you've had a substantial decline in just in turnover of the housing stock.
LO: The National Association of Realtors reports the housing market is showing signs of a rebalance and a rebound for 2026. What are those signs and how could that impact inventory, home prices and purchasing power?
SJ: Yeah, one thing that you're starting to see is the inventory of homes while it's low has been rising and towards the end of 2025, you did have an uptick in turnover in existing homes. And what the National Association of Realtors is concerned with, as their name suggests, is turnover in the existing housing stock. They're not home builders, they're home sellers. They're the ones that are transacting and getting a fee usually on both sides of the transaction. And so, it's been a difficult time in some parts of the country to be selling real estate because so little of it is being sold, but they did see an uptick.
If mortgage rates stabilize or come down, then that should help clear the log jam because there are a lot of people who want to move. For just various life reasons, want to move, not just finding a new job, but downsizing and what have you. And another phenomenon you see is, we mentioned earlier in the show that people, let's say Generation X or Baby Boomers were much more likely in their 20s to be homeowners than people who are the same age today.
What you're also seeing is a lot of them, even after retirement, keep hanging onto their homes rather than moving. That also was a source of new housing stock, traditionally, as people raised their children. And then they had that three bedroom or four bedroom home, whatever in the suburbs, and it was too big for them. And they sold it, and then a young family moved in. That's what my wife and I did 23 years ago and we moved here. That was pretty much everyone whose house we looked at, was a generation older than us and thinking of selling their home. And their savings were tied up in the home too. And we were just getting one. But now, even those homes are not turning over as quickly because they're hesitant to give it up and then where are they going to move? And so, there are signs that that's all starting to move.
NC: Additionally, speaking about availability, Linda messaged me earlier about the administration's aims to push out the marginal buyer, large institutional investors, to allow individual families better access to housing. What kind of impact has a lot of these homes being used for Airbnb or short-term rentals—what kind of impact has that had on availability and accessibility for families or first-time home buyers?
SJ: There are a lot of homes that are owned by landlords for various reasons. More than there used to be. And so, let's just split those into a few categories. You have people perhaps in a vacation destination, or near a large city who might be operating them if they're allowed to for the purposes of short-term rentals. That's one factor that didn't exist before, where it's someone's business. That only really affects isolated areas.
Then you have, and you've always had this, mom and pop landlords that are the biggest group of landlords, who own a home or two or three or five. It's not a very glamorous business. They rent it out to people, they maintain it. It's hard work and you’re taking risks. Even though you own five homes, you have mortgages on those five homes usually. And they’re not crazy rich.
And then you have private equity: Large private equity companies who are a relatively new player, really, since the financial crisis, who are in the market. And they're viewed most controversially. The mom and pop landlords are kind of overlooked in all this, even though they're much bigger.
Approximately, depending on which source you look at, between 1% and 3% of homes are owned by institutional landlords like that. Blackstone, the private equity firm is a big player there, but others as well. They saw an opportunity after the housing bust when interest rates were very low, a lot of homes had been built. Many were facing foreclosure or partially constructed. And there were certain parts of the country like the Sunbelt especially, where they concentrated, where they could buy hundreds or even thousands of homes in one metropolitan area, and then centralize the management of those, have the same appliances, have the same guy, fixing the pipes and mowing the lawns and generate economies of scale, and then rent them out to people who wanted to have that single family home, but could only afford to rent or only wanted to rent.
And they’re not popular. They've been targeted on the left and more recently on the right as creating affordability problems. I would say that the problem is probably exaggerated for a couple of reasons. One reason is that they're not owning these homes and then leaving them empty. That's not a very good business. They're renting them out. They’re renting them out because there's the demand to rent these homes. It is someone's home. They just happen to be renters. And as we said, people are more likely to be renting in their 20s and 30s than they are to be owning a home now.
And the other thing is that it's really concentrated in certain areas and it's not that much of the housing market. Now it's very frustrating for you. You go to buy a home and you're like, okay, I'm gonna go to the bank and get this mortgage approved and I walk through it and I definitely want this. It's a slow, cumbersome, expensive process for you to have it inspected and whatever. If you're a subsidiary of Blackstone buying a home, you can do that instantly. You can see the house, send your guy in and then decide on the spot to buy it. You don't need to wait for the bank to approve your mortgage. You have a gigantic pot of money specifically set aside to buy the home. And so you can never with private equity and that's left some people frustrated.
But they're not after most homes. I don't think that private equity would buy my house on a random New Jersey suburb. It's not the kind of thing that they want to own. And so they're most prevalent in a certain type of home in certain areas and it's useful. I don't think that it's evil. But they've come under political attack for before basically creating demand for homes. And so, if they drop out of the market, I don't think it will affect affordability very much, but maybe at the margin.
NC: You've talked about the construction of rental units in Arizona, especially around the Phoenix area. How has that dynamic affected the housing market in Arizona and other states that have seen similar growth in rental properties? Is this notion of renting versus owning viewed as more favorable these days?
SJ: Well, you've had a real boom, especially since the pandemic in construction of apartment communities all over the country, but especially in the Sunbelt. But you've also had, it's called a BTR, “built to rent,” where you have individual self-standing suburban classic homes being built with the express purpose of renting them out. And that's also a Sunbelt phenomenon mostly, but not entirely. It’s being done in the Sunbelt for two reasons. One is that there’s land available in the Sunbelt, very difficult to do, you know, on the West Coast, in the Northeast, places like that. But also because population growth is there. You've had shifts in population from parts of the country to warmer parts of the country. And so you have a steady influx of people who would like to move to those places. And at least initially they’re going to rent a home rather than take out a mortgage or buy one.
LO: I remember the days when you could assume a mortgage. You could buy another house and assume that house's mortgage, which was very nice from a consumer's point of view. Is there any chance we'd ever go back to something like that?
SJ: I know it's possible. I know one person who actually has done it in recent years. It's extremely complicated because the bank has a relationship with you. Think about all the paperwork you had to fill out, all the kind of, it feels like a complete, like you're joining the CIA or something like that, in terms of the background check that you go through to take out a mortgage. And then someone else shows up and says, "Oh, now I'm gonna be your guy." Well, they don't know you as well. They don't know your background. And so there's a bureaucratic obstacle to taking over someone's mortgage. That would solve some problems, of course, because you have all these people who are locked into very low 30-year mortgages. And then if someone else could show up to take over your mortgage, and then you could go to another place and take over someone else's, then that would be ideal from a customer's point of view.
Also, that mortgage isn't being held by your local bank anymore. That mortgage has gone through a couple of hands. Usually what happens when you take out a mortgage, it's sold two months later to Fannie Mae or Freddie Mac, these government mortgage giants. And then that's further sold into some trust. And then it's serviced by yet another company, the servicing rights are sold and then sold again. And so, it’s out there somewhere in the ether. They're still asking for the money every month, and you’re writing the check to the same place, but it's going to a different place than it was the first month you had that mortgage. And that makes it a little bit more complicated to have a system where people assume one another's mortgages.
LO: So hopefully interest rates will play a role in this, and that might open up some opportunities
SJ: Yeah, we’ll keep our fingers crossed. Long-term interest rates have to come down. Of course, the Fed cutting rates only affects so much. They can control the overnight rate completely, but they can't control the long end of the curve. And it's really the 10-year US Treasury note and maturity is beyond that, that pretty much directly determine the cost of a mortgage. If people are hesitant about lending Uncle Sam money very cheaply for 10 or 20 years, then the mortgages won't get cheaper either.
NC: So not really connected, but loosely sort of connected. What is the temperature with reverse mortgages right now? Because of the options that you're mentioning, because of the way people are trying to come up with solutions, what is the finger on the pulse of reverse mortgages say?
SJ: Yeah, I’m not particularly knowledgeable. I'll tell you what I know about reverse mortgages, which is that they are product, marketed to older people specifically. They often are predatory. Reverse mortgages are basically a way to say, hey, you don't have to sell your house. You could stay an age in place. And, you know that mortgage that you spent all those years paying off? Well, now we're going to give you a reverse mortgage where you're basically amortizing the equity that you build up and you gradually build it down. So you're basically kind of borrowing from yourself. But then what happens at the end of that in terms of what your heirs will inherit, what kind of fees are wrapped into it, what sort of costs are associated with it? It’s another question entirely, where people have to be extremely cautious. You know, it seems to be like a lot of stars from the 70s or earlier who are kind of trusted figures who are the front men in the commercials for these products, not surprisingly.
I do know that there have been many kind of concerns that people are being taken advantage of or paying unnecessarily high fees, but I'm not especially knowledgeable, I have to say, about reverse mortgages. They're not mortgages. They are basically products to lend you your own money. NC: And something you referenced is that there are very specific timeframes usually with, if the person passes, the family has only so much time to pay off that loan before they do lose the asset.
SJ: Yeah, I have to say, like I'm not super up to date with reverse mortgages. I've read about them. I've read some disturbing things about them. I know that you have to go in, get reputable advice. You know, don't just talk to a salesperson. Go to a reputable newspaper or financial magazine or financial advisor and talk about it. Someone who knows what they're talking about and doesn't have anything to sell you when you engage in a contract like that.
LO: Spencer, from a historical perspective, what are some examples of how housing policy or innovative construction have adapted to societal needs and economic trends? And does this shed any light on where we might go from here?
SJ: You know, it's really interesting. I've spoken with home builders and suppliers the home building industry, for example, who say like that what you're seeing now are they're called “decontented” homes. They’re building new homes, but they might not have the stainless steel appliance. They might not have certain bells and whistles. The footprints are smaller. The square footage is smaller of newer homes. For years, you saw growth in the square footage of the average new US home. And in the past three or four years, that's been decreasing as the cost of building materials has risen and as the cost of appliances and copper wiring and things like that has risen. In order to make them affordable, they’re making them smaller and simpler. So that's one thing for sure. Another thing you've seen, to the extent possible, is multifamily homes where you have generations living together, living side by side, living one on top of the other, which kills a few birds with one stone. One is obviously making the homes cheaper, but also dealing with things like childcare where you have grandparents who can watch the grandchildren while the parents work.
And so, yeah, I think that the home builders are, they have their pulse in terms of what people want and what they don't want. They're selling what you want to buy. And the homes that are going onto the market now, the new homes, are homes that were planned, not maybe a little more than a year ago and designed to meet what they perceive as the needs. Not just the way that they look from the outside and feel on the inside, but also to be priced right so that they'll move. They don't want to sit on inventory either.
LO: Spencer, thank you. We really appreciate your help helping us to navigate these complex financial times in the housing and mortgage markets. For more insight from journalist Spencer Jakab, his Markets A.M. newsletter is published daily by the Wall Street Journal at wsj.com/newsletters/markets-am. Thank you for joining us today.
SJ: Thank you.
NC: When we come back, we dive further into innovations in housing affordability on a regional level here in the southwest with two experts from the University of Arizona.
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LO: Joining us now are two people who know the regional housing market well. Both are from the University of Arizona. Kenny Wong, who is a lecturer in Sustainable Built Environments and co-director, Arizona Research Center for Housing Equity and Sustainability, known as ARCHES. And Dan Kuhlman, assistant professor of real estate development and planning at the University in the College of Architecture, Planning and Landscape Architecture.
NC: The US Department of Housing and Urban Development (HUD) awarded one of the first Hispanic Serving Institution Center of Excellence awards to create the Arizona Research Center for Housing and Economic Solutions(ARCHES). Kenny Wong, you are a co-director. Daniel Kuhlmann, you are a principal investigator. Can you please explain what ARCHES does and the connection to the Drachman Institute and the UA College of Architecture.
Kenny Wong: So ARCHES, as you mentioned, is a HUD research center of excellence and it's bringing focus on the housing market and its dynamics to our state and our region in the southwest. The center itself is co-located at the Morrison Institute for Public Policy up at ASU and our Drachman Institute for the Built Environment here at U of A, which is part of the College of Architecture, Planning, and Landscape Architecture. As you mentioned, I serve as one of its co-directors alongside Alison Cook-Davis. Daniel Kuhlmann here is one of our faculty leads. His counterpart, Deirdre Pfeiffer, is also at ASU.
So our collaboration ties together these faculty and researchers across our ABOR universities as well as the University of New Mexico to create this network of housing expertise.
LO: Well, Dan and Kenny, how is the research you're doing making a difference for Arizona residents and the community at large?
Daniel Kuhlmann: Yeah, thank you and thanks for having us. So our goal with ARCHES is to create evidence-based, community-informed, policy-focused research on housing issues that have been existing in Arizona for a long time and are maybe newly impacting our communities. With ARCHES, I'm an academic researcher by training. We noticed at the University of Arizona and at our partner institutions that there's a lot of great housing research that's going on, but it's not always the easiest to kind of coordinate across disciplines and coordinate across institutions. And so with ARCHES, it really gave us the opportunity to have that structure in place to make it so we can speak to each other and really kind of communicate our research out into the community.
NC: Now housing affordability has emerged as a key political issue and home builders are paying attention. Bloomberg reports builders such as Lennar and Taylor Morrison Homes are working on “pathway to ownership” programs that could involve entry-level homes being rented to tenants with a portion of the monthly payments counting toward future down payment. When researching innovations in housing, what are some of the considerations taken into account today that may not have been a factor 5, 10, 20 years ago?
DK: So I think the barriers to first-time home ownership are not new. They've always existed, but I think maybe they're more elevated, particularly coming out of the Great Recession of 2008. So some of these more creative ways to try and open up home ownership to folks who have been kind of locked out of the market are sort of interesting to look at.
I think we're seeing a lot, and this is a relatively new issue in Arizona, but one that's affected some of our peers on the coast, so places like California and New York. There's just kind of a lack of supply and affordability. Arizona used to be the kind of the bastion of affordable housing, at least relative to some of our other southwestern states. But increasingly we've seen housing prices rise and incomes not keeping up with the kind of increase in housing prices. So I think these things, again, have existed in other parts of the country for a long time, but are relatively new to our region specifically.
LO: Well speaking of housing affordability, The Wall Street Journal reported in February that homebuilders are proposing new policies to the White House to address the largest housing inventory surplus in 15 years.
Can we just take a moment to clarify, in case people think they're hearing conflicting information: there are those reports that there's a glut of surplus of newly built homes. And yet, as you're indicating, there's also a shortage affecting demand in areas where people want to live. How can these two reports be true?
DK: Yeah, I mean, that's where the challenge is with housing, is that we can have a lot of housing nationally; kind of oversupply in certain markets and under supply in others. I think even you look in places like Arizona, where we see lots of cranes going up in the Valley and new construction, and you see a lot of new units being added to the market, but it maybe is just sort of signaling that we're so far behind on keeping up with demand in places like Tucson and Phoenix, that we still have a long way to go to build more supply to meet the number of people who are looking for housing in our communities.
KW: Just wanted to throw in there as well access to jobs, how long our commute is to work, the placement of where these homes are just super critical to the whole picture for a household.
NC: If there is a glut in the supply of newly built homes, the solution of ‘just build more homes’ doesn't really seem to be the obvious solution that appears to be. What are some of the challenges that you've uncovered researching housing growth and production?
KW: Part of that is the type of housing that people are interested in. You know, there may be changing demographic shifts, changes in taste. And so it's also the types of housing that's available for folks to have that choice, match their household size, their lifestyles.
And part of that, what we're looking into right now is condos, which might provide a more accessible entry into home ownership. And that's a really different type of product from your single family home. Something that is maybe more urban. You're sharing some spaces within the complex you're living in, and that might meet a different set of needs for folks.
LO: There’s also the issue of renting versus buying. And according to voter survey findings from the nonpartisan think tank, Center for the Future of Arizona, nearly 85% of Arizona voters find that rental and housing prices are just too high. What can be done in both areas to bring down those prices?
DK: We still need to go a long way in building more housing in the places where people want to live. I think particularly with rental, we see a spike of demand, people moving here, particularly during the pandemic, or at least in a notable way during the pandemic. It just puts strain on the existing housing supply, particularly, again, in kind of the denser urban areas that people want to live in.
So kind of adding to supply, and I think then in the owner-occupancy side, thinking kind of about some of those programs. Like, can we build more of entry level houses? Can we build more multi-family housing with an owner-occupancy component? So, you know, think of condominiums. There's challenges there that are more than just kind of zoning and supply related, but there are things that can be tackled to really kind of respond to some of these challenges.
LO: What challenges in particular with the condominiums?
DK: So we had a panel back here at the University of Arizona in the fall, looking at the challenge of defect liability laws that Kenny mentioned. So, we have at the state level, laws that kind of impact how long the builder is responsible for ensuring against any sort of construction defect that's found by owners of the units, and I think in Arizona, I believe it's eight years.
That makes it really challenging for developers to build for sale multi-family product. You know, you'll sell it and then kind of eight years down, the liability is about to expire, you'll see kind of lawsuits pop up that make it really hard to build, make it really hard to ensure that product. And so as a response, we see a lot of multifamily development, but it's kind of overwhelmingly rental-only in Arizona. And so, you know, in other markets, you see, you know, multifamily condos being a good entry point into homeownership where that's just not the case in Arizona as much as it could be.
NC: Yeah, that's a good point: “How does the region affect the demand and the type of housing?” According to the National Association of Realtors 2025 profile of home buyers and sellers, the share of first-time home buyers dropped to a record low of 21% while the typical age of first-time buyers climbed to an all-time high of 40 years.
In addition to the condos and you mentioned rezoning and relaxed density, what are some of the solutions that you have researched that are the most exciting or promising?
KW: I'd say one, a growing area of interest is the willingness to revisit our permitting processes: streamlining that, seeing if there could be a more consistent pathway to delivering and producing new units.
I'm also encouraged by offsite construction. You know, we have new innovations in what we can do offsite and with manufactured homes. So if there's also consistency in how those can be produced and delivered, that can put units online much more quickly.
NC: So let's say, I want to buy a log cabin from an old Sears catalog [laughter]. But this is much more advanced than that now. So that's kind of interesting, if they have a certain area where they manufacture off-site construction, that could affect a couple different things, right? It could also affect jobs. That would be another element, but that's very interesting that they're considering that. Is that very common already?
KW: Well, we've seen some movement in California around casitas and ADUs (accessory dwelling units) where these small types of units could be produced offsite. I think that's still a nut they’re trying to crack in terms of how to get that up to scale. Each home, each lot is quite different. But the technical processes are there, and it's a way of trying to figure out how do you assess and get the right purchasers and a consistent market for those manufacturers as well.
DK: Yeah, and you can see there's, you know, we think maybe at least historically, like the Sears kit homes or, you know, the, what are called, you know, like manufactured housing. So the kind of chassis built manufactured housing. But there is kind of a range of these modular designs where it's like you're not building the one unit in the factory, but you're building kind of modules that you can fit together in kind of innovative ways. And there's also things like panelized construction where you're building kind of wall panels in a factory and then assembling them on site. So Habitat for Humanity here in Tucson has the CHUCK Center where they do these panelized constructions for the habitat projects, which is, know, maybe not quite what we think of when we think of manufactured, but it really can speed up the process and reduce costs for new development.
LO: Just wondering though, with the extremes we're seeing in climate, how do these stand up, especially with heat and other elements?
KW: Yeah, they can be quite high performance. The wall panels Dan's mentioning, you know, similar to a stick built, site-built wall section that you might have in your standard subdivision. And it's a really different technology or construction process, let's say, than manufactured or mobile homes of the past.
LO: So are you saying that it could even help with things like electricity prices because of the way that it's built?
KW: Oh, yeah. And if you are paying attention to the materials and the insulation and how that's assembled back together, you can have quite a high quality construction. And if you're doing it within a manufacturing facility, protected from the elements with a consistent process, there can be a lot of gains to be had there.
LO: Well when you think about the inventory constraints that we're seeing in Arizona and many other areas, does it make sense to demolish a home and then start from scratch? Or is it more practical to try to rebuild if you have that choice?
DK: Yeah, I mean, I think it really obviously depends on the context of the site, right? There's some units that, you know, are maybe really underutilized in their kind of current construction, right? So a single family house in a large lot in a dense urban area, like those are maybe ones for either kind of additions to the lot or potentially kind of demolition and redevelopment.
But I think a lot of when we're talking about upzoning specifically and particularly with low-density single-family kind of residential neighborhoods, there's a lot of fear that these upzoning are going to lead to wide scale demolitions. And I think at least as we've seen elsewhere in the country that have done these relatively progressive upzoning, that's a pretty at least overblown fear, right?
Some of it happens in particular context, right? But I think a lot of it is, you know, you see this development is really meant to be of piecemeal and kind of small scale. And you find a lot that works really well for this type of development. And then you see maybe a four-plex go up or there used to be a single-family, or or an empty lot that would have otherwise been developed as a single-family is developed as a as a duplex or something like that. So, you know, I totally understand the fear, like, you know, especially if you if you bought into a single-family neighborhood and you kind of really appreciate that character. But I think these changes are meant to be sort of incremental and not have huge impacts on the community.
LO: And just one point of clarification, how do you define upzoning?
DK: Yeah, good point. It's always important to remember, it's a very wonky term. So upzoning is a broad category, probably non-technical term, but it's just going from a lower density to a higher density. So if you go to single-family and then you're allowing what we call “missing middle,” so kind of small multifamily development, townhouses, row houses, up to fourplexes or kind of garden style apartments.
So one of the other kind of, you know, things that sometimes people kind of misunderstand about upzoning is, is an upzoning typically is not saying that you can no longer build the lower density. Right. It's just you have the option to build slightly higher density in addition to the single-family that used to be allowed in those sites.
LO: Great. Thank you.
NC: Kenny, you played a role in design research at cityLAB and explored connecting schools with housing development in the School Lands for Housing Project and envisioned future scenarios for housing for California 100. What are some of the things you were able to determine, and how could future scenarios for California 100 apply in other states?
KW: Thanks for bringing that work in. The goal of scenario planning, too, is kind of to help us imagine what are the drivers of where we see ourselves today and by plotting these out, what are some potential scenarios? And to think through what are some of the challenges, opportunities of what where might we chart our course together? And so in that work for California 100, we saw really two important drivers or how we understand housing as whether it's an individual or a social good. So what's the value we place on that? Who gains? Who's got rights to housing? And how does it build a community more collectively? That being a key driver.
And the other one was the level of production that we might have in housing: What would the environment be with those values if we were producing much less housing or much greater amounts of housing? And it puts pressure in different dynamics, different quadrants of what this world might look like.
So if we had really high housing, for instance, and really saw housing as a private good, we might see more sprawl as we expand and build in new places very easily. And on the far end from that, if we see housing as this really important social good, but are really constrained by how much we can build, whether that's regulations or just the capacity to construct, we might be living with this contradiction of not having enough, not allowing housing to be attainable.
So it helps us to kind of see some of the extreme scenarios and figure out if we want to avoid this, where we want to head towards a different direction, what are some tools, some ideas that we might put into place?
LO: Well, I grew up in a multi-generational family with grandparents, parent, aunt, very small house, and I did find some challenges. I'm wondering what has changed now in the way that you both think about multi-generational homes?
DK: Yeah, I mean, I guess, you know, I think it is, as common as it used to be in the US, right? It’s been interesting. I'm not from the Southwest originally, but I think as a style of housing development, it's a little bit more common in the Southwest, at least historically, right, having more of a family compound type structure.
I think, yeah, there's a lot of opportunity to think about the way in which we build not just like individual units, but buildings that can work for families, that can work for people who are aging in place, that can work for young adults. I think we've built a lot of housing over the last 20 or 30 years that's focused on one group, right? We're going to build single bedroom unit multifamily for young professionals, and then we're going to build family residential for young families. And then we're going to build age-restricted senior housing for older generations, right? And I think there's a lot, I don't know if it's progress yet, but a lot of discussion about how can we think more holistically about making those options flexible for people as their life cycle changes.
LO: Well, we understand that ARCHES focuses on healthy homes and aging communities, and then we've heard that in Phoenix, Lennar Homes has introduced next-gen multi-generational homes. So I guess the question is, how can you in that type of configuration have both family privacy, and offer togetherness for the same family?
KW: That's a great area of design, you know, how we create privacy, how we might be able to separate out spaces and also create communal rooms and areas to convene—whether that's outdoor spaces or just the configuration of these homes. So those are pretty nice innovations that allow us to share space a little more efficiently and reduce some of those conflicts that might come up.
NC: During Arizona Gov. Katie Hobbs’ 2026 State of the State address, she announced the Affordable Acceleration Fund which would combine public and private money to build affordable housing more quickly. When it comes to building homes in Arizona and the arid Southwest, what roles does water play when it comes to satisfying demand and the speed in which homes are built?
DK: So water obviously kind of impacts our life in kind of every aspect in the Southwest. I think we've seen, and you're seeing maybe a little bit more acutely in the Maricopa region, but probably a limit to how much we continue to sprawl.
You know, you see like the Arizona Groundwater Act is requiring new developments, have a hundred year guaranteed supply of water, which has been a challenge for particularly kind of the peripheral developments within the region. So I think how quickly it happens is still sort of an open question, but I think we're going to have to, as a state, start thinking more about kind of infill development in our existing communities.
Again, it’s much more water-conscious to build densely and live in a denser community where you can have some shared landscaping water costs and live in slightly smaller units. And that's not been the tradition in Arizona, at least over the last 50 years. And so I think that's going to really change the landscape of development in the state in a pretty notable way. And I think you can, again, look to California and some of our of other kind of peer states to see kind of versions of that type of development that could make sense here.
KW: I wanted to throw in a quick plug for our colleagues at the Kyl Center for Water Policy also within the Morrison Institute.
LO: The other part about water that strikes me as important, and I know you all work on landscaping, that seems to be an essential element as well: Designing landscapes that are not going to use so much water as some of the older homes have. Is that kind of a new trend?
KW: Absolutely. And that's it's probably a larger culture shift too, right? What do we expect? What adds value to our homes? What do we like to see? And so I have great colleagues in landscape architecture training the next generation of water-conscious designers.
LO: Well, if you look at the bigger picture and working towards solutions, what is the best balance for local, state and federal efforts? How can these various entities work together to reduce some of the zoning issues that we've heard about and create housing that is more affordable?
DK: Yeah, I mean, I think, you know, every level of government has a role to play. Looking specifically in Arizona, we've seen some state preemption bills that have changed zoning kind of statewide or within a particular class of cities. So larger cities have requirements to have the smaller multifamily allowable near their urban core. The ADU law a couple legislative sessions ago; so new accessory dwelling units, casitas, small kind of additional units on kind of residential parcels.
So we've seen that at the state level, but we've also seen cities, you know, go above and beyond kind of what's mandated at the state, right? So Tucson had an ADU bill before the state kind of required that cities over, I think it was 50,000, kind of have that legislation. Tucson recently passed “missing middle” legislation that went beyond what the state required that they do, right? So we're trying to get ahead of the need within our community. So I think you'll continue to see the state legislature play a role, but then you'll also see, you know, cities kind of responding to the particular needs that they see in their communities.
And then, you know, I think at the federal level, you see, we haven't really talked about, you know, subsidized affordable housing. So I think zoning changes and kind of these regulatory changes are super important components of the answer to the housing crisis.
But, you know, there's going to be a subset of the population that are never going to be super well served by private markets, right? So particularly, very low-income families, subsidized housing is going to continue to be kind of an important policy lever to help families find safe and affordable housing. So the federal government is federal and state government in combination with, but at least historically the federal government primarily provides funding for that type of development. And hopefully we'll see that continue into the future.
LO: And before we close, what do you both think is going to happen in terms of safe and affordable housing? What does the future look like?
DK: I'm an optimist. So I'll, you know, I'll jump in and I'll say, you know, I'm hopeful. I mean, I'm hopeful, at least in the short term, that we'll continue to see some of the, I think, forward looking, you know, state and local changes that sort of acknowledge that the issues that our communities are facing and kind of increasing housing supply and making it so we can build in the places where people want to live.
Going forward, I'm kind of hopeful that we'll continue to see, federal legislation that continues to focus on affordable housing, but housing affordability more generally as well, right? In my relative—I mean—my increasingly long experience, but still relatively short experience in this area, we've seen a lot of changes in kind of how housing is discussed at kind of every level of government. And you know, I think that's probably just speaks to the acuteness of the housing crisis in places like Arizona, but places all over the country. And so I think we'll still see, sort of local and state action to address some of these issues.
LO: And Kenny, why don't you wrap it up?
KW: Yeah, just very points from Dan. You know, I think it's such a pressing issue. It's a very real experience and issue for a lot of folks. So we see the housing conversation growing. A lot more people aware, tuning into what's going on around them locally, and even at the state level. So I think that builds about our context and that openness to revisit some of the ways that we've done things in the past. And whether it comes down to, living close by to your grandkids and your children and making sure that there's a market for them as well, we're looking a bit more towards the future than we have.
LO: Thank you, Kenny Wong and Dan Kuhlmann with the University of Arizona College of Architecture Planning and Landscape Architecture, and also ARCHES. Thank you both.
DK: Thank you.
KW: Thank you.
Thank you for listening to Navigating Our Financial Times. This program is not intended to provide investment, tax or financial advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. The views and opinions expressed by guests are their own and do not imply an endorsement or recommendation or necessarily reflect the views of AZPM.
