Wash the potatoes and dice them into roughly 1/2-inch cubes — no need to peel them, the skin adds great texture and flavor. Dice the yellow onion and green bell pepper into similar-sized pieces and set aside.
Place the diced potatoes in a microwave-safe bowl, add a splash of water, and cover with a damp paper towel. Microwave for 3 to 4 minutes until the potatoes are just barely tender but not soft. This ensures fluffy insides and extra-crispy edges in the air fryer.
Drain any excess water and pat the potatoes dry with a paper towel.
In a large bowl, toss the par-cooked potatoes, diced onion, and green bell pepper with olive oil, smoked paprika, garlic powder, onion powder, salt, black pepper, and cayenne pepper until everything is evenly coated.
Preheat the air fryer to 380°F. Spread the seasoned potatoes and vegetables into the air fryer basket in as even a layer as possible. Cook for 18 to 22 minutes, shaking the basket every 5 to 6 minutes so all sides get golden and crispy.
During the last 5 minutes of cooking, increase the temperature to 400°F to get those irresistible crispy edges and deep golden color.
Transfer the home fries to a serving plate, sprinkle with fresh parsley, and taste for seasoning. Add an extra pinch of salt if needed and serve hot.