The most expensive hidden subsidy in Arizona’s housing market isn’t a government program. It’s the groundwater the developer doesn’t pay for. Jon Riches argues in National Review that Democrats are killing affordable housing by using water regulations to block new construction in the West — pointing to Governor Hobbs’s administration, which halted groundwater permits in Maricopa County using a novel “unmet demand” standard without formal rulemaking, effectively freezing around 13,000 homes. A court struck it down. Riches, who works at the Goldwater Institute that brought the case on behalf of the Home Builders Association of Central Arizona, frames the episode as proof that unaccountable bureaucrats are the real obstacle to affordability.
The procedural point has real teeth. An agency that rewrites the rules by refusing to process permits, without going through the formal rulemaking process the legislature requires, has overstepped. Courts exist for exactly this reason, and this one did its job. No argument there.
Now ask the question the op-ed doesn’t: if those 13,000 homes get built, will Arizona’s housing become affordable?
It won’t. And the reason tells you more about what’s actually broken than anything in the piece.
Start with the water. Arizona sits on a finite aquifer. The 100-year assured water supply rule has been on the books since the 1980 Groundwater Management Act, requiring new subdivisions to prove they have enough water for a century. That’s the “commonsense rule” Riches says worked fine for decades. It did work — until it didn’t. What changed wasn’t the law. It was the cumulative draw. For years, each developer proved its own parcel had enough water, and nobody added up whether the aquifer had enough for all of them together. The “unmet demand” standard the Hobbs administration adopted was a recognition that the old per-parcel accounting was letting the region over-commit the same water twice. Clumsy, legally questionable — and the court was right to demand proper procedure. But the physical problem it was trying to name is real, and no court ruling made it go away.
The homebuilders won their lawsuit. Wonderful. The groundwater didn’t get the memo. Lake Mead is still at historic lows. The Central Arizona Project’s allocation gets cut in shortage years. And the groundwater under Maricopa County that the “100-year rule” was supposed to safeguard is being pumped faster than it can recharge, some of it so deep and old that it won’t replenish on any human timescale. The arithmetic is not a policy choice. It’s a physical limit, and pretending otherwise turns a real crisis into a story about paperwork.
When you skip the honest water accounting, the cost doesn’t vanish. It gets transferred. The developer builds, sells, and moves on. The municipality that has to pipe water in from three hundred miles away picks up the tab. The family whose well drops thirty feet in a decade picks up the tab. The taxpayer funding emergency infrastructure picks up the tab. That is the move. Privatize the profit from the sale, socialize the cost of the water. The op-ed calls removing that accounting a victory for affordable housing. It is — for the developer. The water bill still exists. It just shows up in someone else’s budget, later, when the builder is already on to the next project.
The Goldwater Institute brought this case on behalf of the Home Builders Association. Everybody has a client. But when the argument is “get rid of the water requirement and housing gets cheaper,” it is worth noticing who gets the cheap part and who gets the bill. The developer’s interest in your affordable home ends at the closing table.
Now look past the water to the question the op-ed never touches. Phoenix is one of the fastest-growing metros in America. New subdivisions stretch to the horizon. Maricopa County has built and built for decades. And the median home price has roughly doubled in the last ten years. Renters in Phoenix spend a higher share of their income on housing than the national average. If supply were the whole story, Phoenix should be one of the cheapest housing markets in the country. It isn’t.
The supply argument, as the op-ed deploys it, suppresses the most important variable: who is buying the houses. When a new subdivision opens in the East Valley, the first buyer is not always the couple with a stroller. Sometimes it is an institutional landlord. Invitation Homes, the single-family rental giant, owns thousands of homes across the metro. A 2026 Business Insider analysis identified Phoenix as one of the cities with the highest concentration of mega-landlords in the country. The GAO published a dedicated study of the phenomenon this spring. Private equity and REITs treat houses not as places to live but as instruments that produce monthly returns.
This is not a conspiracy. It is a business model. A house that generates rent is a financial asset. Financial assets attract financial buyers. Financial buyers will pay more than a family looking for shelter, because the family needs a roof and the investor needs a yield. The market does not grade on need.
So when Riches argues that Democrats are “killing” affordable housing through water regulations, he is making a specific claim: that the binding constraint on affordability is the number of permits. It isn’t. The binding constraint is who buys the house once it’s built. Build those 13,000 homes, and if three thousand of them are snapped up by rental investors before the first family gets a showing, you have not produced affordable housing. You have produced more feed for the extraction machine. And the Home Builders Association — the Goldwater Institute’s client — will have done very well regardless of whether any working family can afford to live in what they built.
Here is what would actually make housing more affordable in Arizona. None of it requires a revolution.
Community land trusts buy land, build or preserve housing, and sell the homes while keeping ownership of the ground underneath. The family builds equity. The investor cannot buy the land. The Champlain Housing Trust in Burlington, Vermont, has used this model to keep homes affordable for working families for decades. It is not a theory. It is a building with keys.
Housing cooperatives — residents own the building collectively, one member, one vote, no outside shareholders — are the oldest form of non-market housing in America. New York City has well over a hundred thousand co-op units. They are not utopian. They are plumbing.
And if the argument is really about water, then price the water honestly. Charge every developer the full cost of the groundwater their project consumes. That means pricing the infrastructure, the long-term aquifer depletion, and the pipeline that will be needed when the well drops — and then letting the market sort it out. It also means building density where water already exists, not more sprawling subdivisions on borrowed time. Tucson has been doing managed aquifer recharge for decades. It works. It requires accepting water as a binding constraint, not an inconvenience.
If the house is still affordable after the developer pays the real cost, build it. If it isn’t, then what was on offer was never affordable housing. It was a subsidy for a desert lot, paid for with someone else’s water.
Building these institutions in a state where the development lobby just won a major court ruling is not easy. Community land trusts need upfront capital, usually from public sources. Housing cooperatives need legal and financial infrastructure Arizona has not prioritized. And the developer lobby — the same one arguing that water accounting should be optional — will fight any ownership model that keeps housing out of the financial pipeline. The obstacle is not that these institutions don’t work. It is that they work for the people who live in the houses, rather than the people who build and finance them.
The op-ed frames this as Democrats against the market. The real question is who the market serves. A housing market built for developers and institutional investors produces housing that serves developers and institutional investors. A housing market built for families needs different plumbing — and an honest water bill.
Those 13,000 homes might still get built. They should, if the water math works after honest pricing. But the question was never whether to build in the desert. It was who owns the house when the last nail is driven, and whether the family inside is paying for a home or for someone else’s quarterly return.