What Arizona Investors Should Know About HB 2721 and “Middle Housing”
What Arizona Investors Should Know About HB 2721 and “Middle Housing”
By Michael Del Prete Executive Director, AZREIA
Arizona continues to adjust how housing is planned and built, and one of the most important changes for real estate investors to understand is House Bill 2721, often referred to as the state’s “middle housing” legislation.
At a high level, HB 2721 requires larger cities like Phoenix to allow certain small-scale multifamily housing types in areas that were historically limited to single-family homes. The intent is to expand housing supply closer to job centers, infrastructure, and urban cores without relying exclusively on large apartment projects.
As someone who works daily with investors navigating zoning, entitlement, and neighborhood dynamics, I believe laws like HB 2721 are neither good nor bad on their own. They succeed or fail based on how responsibly they are implemented and executed.
For investors, this law is less about headlines and more about what is actually permitted on the ground.
What the law allows
HB 2721 encourages cities to permit what planners call “missing middle” housing, which may include duplexes, triplexes, fourplexes, and townhome-style development. These options are typically limited to specific areas identified by the city, often near downtowns, transit corridors, or employment centers, and must still comply with local zoning standards, building codes, and design requirements.
What the law does not do
HB 2721 does not mean every single-family lot can suddenly become a large apartment building. It does not eliminate permits, reviews, historic district rules, HOA restrictions, or safety codes. Cities still regulate setbacks, height, lot coverage, parking, utilities, fire access, and design review. The key change is that blanket single-family zoning can no longer be used in certain areas to prohibit all small-scale multifamily housing.
Why this matters to investors
For AZREIA members, HB 2721 creates opportunity but only for disciplined operators. Investors who understand zoning overlays, neighborhood context, and entitlement risk may find value-add potential, improved land efficiency, and strong demand for smaller, more attainable rental units.
At the same time, this law raises the bar. Projects that ignore neighborhood impact, parking realities, or operational details will face resistance, delays, and long-term risk. Density without standards is not a winning strategy.
At AZREIA, we support housing policies that expand opportunity and demand accountability. Growth without guardrails creates backlash, and backlash slows everyone down—investors included. The real opportunity under HB 2721 isn’t just in what the law allows, but in executing with discipline, professionalism, and long-term thinking.
That’s where sustainable returns are built.