The Tucson housing market, as reflected in data released by the Tucson Association of Realtors®, has experienced notable shifts in various aspects, shedding light on current trends and conditions. Let's delve into the key data points and statistics to understand the current state of the market and what it means for buyers and sellers.
Current Tucson Housing Market Trends
New listings have experienced a modest 1.1 percent decrease for Single Family homes, while showing a contrasting 3.1 percent increase for Townhouse/Condo properties. On the other hand, pending sales have taken diverse paths, with a notable 3.4 percent surge for Single Family homes but a substantial 18.0 percent decline for Townhouse/Condo units. These fluctuations highlight the dynamic nature of the real estate landscape in Tucson.
The inventory scenario in Tucson has witnessed changes, contributing to the overall market dynamics. Single Family inventory has seen a decline of 13.4 percent, aligning with the broader trend of reduced availability. Similarly, Townhouse/Condo inventory has decreased by 14.4 percent, reflecting a market that is undergoing shifts in supply and demand.
Median Sales Prices and Market Trends
The median sales prices in Tucson portray a mixed picture. Single Family homes have experienced a notable 2.7 percent increase, reaching $385,000. In contrast, Townhouse/Condo prices have dipped marginally by 0.4 percent, settling at $248,500. These figures underscore the importance of considering property types when evaluating the real estate landscape.
Days on Market and Inventory Supply
Days on market, a crucial metric for assessing the pace of real estate transactions, has decreased by 4.3 percent for Single Family homes and a significant 26.3 percent for Townhouse/Condo units. This indicates a quicker turnaround in property sales, particularly in the Townhouse/Condo segment. However, the months supply of inventory tells a nuanced story – a 4.0 percent decrease for Single Family homes but a 5.6 percent increase for Townhouse/Condo units. This signals varying levels of demand and supply in the two segments.
Is Tucson a Buyer's or Seller's Housing Market?
Given the contrasting trends in new listings, pending sales, and inventory, the Tucson housing market currently presents a scenario where it could be considered both a buyer's and a seller's market. Single Family homes may offer opportunities for buyers, while Townhouse/Condo sellers might find a more favorable environment.
Are Home Prices Dropping in Tucson?
The data suggests that home prices are not universally dropping in Tucson. While Single Family home prices have experienced a 2.7 percent increase, Townhouse/Condo prices have seen a marginal 0.4 percent decrease. This reinforces the importance of considering property types and segments when gauging price movements.
There is no clear indication of an impending housing market crash in Tucson based on the current data. The market is dynamic, with fluctuations in various metrics, but there is no evidence to suggest a widespread downturn. Vigilance and continuous monitoring are advised for stakeholders in the real estate sector.
Tucson Rental Market Trends
The Tucson rental market in December 2023 has experienced significant shifts, with rented units witnessing a substantial 28.9 percent decrease compared to the previous year, totaling 189 units. Simultaneously, active listings have also seen a decline, registering a 17.1 percent drop to 642 units. These trends indicate a dynamic landscape with changes in both supply and demand factors.
Rental Costs Across Property Types
Examining rental costs across different property types provides insights into the diverse dynamics within the Tucson rental market. The following data highlights the changes in monthly rental costs compared to the previous year:
- Single Family Residence: Monthly rental costs increased by 10.2 percent to reach $2,135.
- Townhouse: Experienced a 7.5 percent decrease, settling at $1,388 per month.
- Condominium: Witnessed a significant 27.9 percent drop, with monthly costs at $1,194.
- Casita/Guesthouse: Recorded a 20.9 percent decrease, with monthly rents at $850.
- Manufactured Single Family Residence: Showed a substantial 42.2 percent decline, reaching $750 per month.
- Mobile Home: No rentals reported during this period.
Analysis and Implications
The sharp decline in rented units could be attributed to various factors, including shifts in population dynamics, economic conditions, or changing preferences in housing. The decrease in active listings might suggest a tightening rental market, potentially impacting choices for prospective tenants.
While single-family residences have seen an increase in monthly rental costs, other property types, such as townhouses, condominiums, casitas/guesthouses, and manufactured single-family residences, have experienced varying degrees of decline. The absence of reported mobile home rentals during this period adds to the complexity of the rental market landscape.
Key Takeaways for Renters and Investors
Prospective renters in Tucson should carefully consider their preferences and budget constraints. The varying trends in rental costs across different property types present opportunities for tenants to find a housing option that aligns with their financial goals and lifestyle preferences.
Property investors and landlords should stay attuned to the dynamic nature of the Tucson rental market. Analyzing the changes in rental costs and unit availability across different property types can inform strategic decision-making, whether it involves adjusting rental prices, targeting specific property types, or adapting marketing strategies.
Tucson Housing Market Forecast for 2024
What are the Tucson real estate market predictions for 2024? Based on the forecast and current market conditions, there is no imminent sign of a housing market crash in Tucson. The predicted positive trajectory for 2024 suggests continued stability. For prospective buyers, considering the competitive nature of the market and the forecasted increase in prices now might be a suitable time to explore real estate options in Tucson.
As of December 31, 2023, the Tucson housing market remains robust with an average home value of $322,244, reflecting a 1.2% increase over the past year. Homes are swiftly going pending, typically within 17 days. These statistics, sourced from Zillow, provide a comprehensive snapshot of the current real estate landscape in Tucson.
Key Market Metrics (December 31, 2023):
- For Sale Inventory: 1,777 homes
- New Listings: 608 properties
- Median Sale to List Ratio (November 30, 2023): 1.000
- Median Sale Price (November 30, 2023): $315,000
- Median List Price (December 31, 2023): $369,458
- Percent of Sales Over List Price (November 30, 2023): 27.1%
- Percent of Sales Under List Price (November 30, 2023): 46.9%
These figures underscore the dynamic nature of the Tucson housing market, revealing a healthy balance between supply and demand.
Tucson MSA Housing Market Forecast
Looking ahead to the Tucson Metropolitan Statistical Area (MSA) housing market forecast for 2023 and 2024, Zillow predicts a marginal decrease of 0.1% by the end of December 2023, followed by a further decline of 0.7% by February 29, 2024. However, the market is anticipated to rebound, showing a positive trend with an estimated 3.5% increase by November 30, 2024.
The Tucson Metropolitan Statistical Area (MSA) encompasses various counties in Arizona, with its base date set at December 31, 2023. This region plays a pivotal role in the state's housing market dynamics.
Tucson Real Estate Investment: Should You Invest in Tucson?
Should you consider Tucson real estate investment? Many real estate investors have asked themselves if buying an investment property in Tucson is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers. The Tucson housing market has a mixture of owner-occupied and renter-occupied units. As per Neigborhoodscout.com, a real estate data provider, one and two-bedroom single-family detached are the most common housing units in Tucson.
Other types of housing that are prevalent in Tucson include large apartment complexes, row houses (attached homes), duplexes, and homes converted to small apartments. Tucson's single-family homes account for more than 50% of the city’s housing units. Let’s talk a bit about Tucson before we discuss what lies ahead for investors and homebuyers. Tucson is home to around half a million people. The Tucson housing market is larger than that, though, because the Tucson metropolitan area is home to around a million people in all.
Tucson is Southern Arizona's thriving metropolis. Metropolitan Tucson has about a million residents, but the population increases dramatically between December and March when Snow Birds fly south to enjoy our pleasant winter. Tucson loves Snow Birds. Is Tucson going to be one of the hottest real estate markets for investors? One of the big factors in the real estate sector's performance is going to be Tucson's ability to continue to attract new companies and to attract other companies to come to this region.
The more sustained growth in the Tucson real estate market buoys confidence in the area, allowing the market to overcome obstacles that have been problematic in the past. The Tucson area is slowly growing and has excellent long-term prospects. Like most cities nationwide, Tucson has experienced strong and steady real estate appreciation over the last couple of years.
Although this article alone is not a comprehensive source to make a final investment decision for Tucson, we have collected ten evidence-based positive things for investors who are keen to buy an investment property in Tucson. Let’s look at the state of the Tucson real estate market and the factors driving the market in the short and long term.
Tucson's Real Estate is Affordable
Tucson, located in southern Arizona, is known for its rich cultural heritage, scenic beauty, and outdoor recreational activities. It's also home to an affordable real estate market, making it an attractive option for homebuyers looking for a balance of affordability and quality of life.
For investors seeking affordable real estate opportunities, Tucson presents an attractive market. With an average home value of $321,809 as of June 2023, the market offers a stable environment with a slight 0.6% decrease in values over the past year. The median sale to list ratio at 1.000 indicates properties selling at or close to the asking price, providing confidence for investors.
Furthermore, the Tucson MSA housing market forecast projects steady growth, with an estimated 7.6% increase in home values by June 2024. This potential appreciation coupled with the relatively short median days to pending (7 days) makes Tucson a promising destination for investors looking for affordable opportunities to enter a dynamic market with growth prospects.
With affordable home values, a stable market, and positive growth forecasts, Tucson's real estate offers investors an appealing opportunity to make affordable and promising investments. The city's strong demand, limited inventory, and balanced pricing indicate a market with potential for long-term equity growth, making it an enticing prospect for investors looking to build a diverse and profitable real estate portfolio.
The Massive Seasonal Market
Like that of Phoenix, the Tucson real estate market sees a massive influx of snowbirds, and retirees who flock here during the winter. That creates a large, seasonal rental market. The need for many retirees to sell their second homes when they can no longer travel or live independently provides an opportunity to snap up properties at a bargain rate. Better yet, a large number of those properties don’t have a mortgage on them. Other snowbirds sell their condo and move into single-family homes when they decide to stay in Tucson year-round.
Tucson's Military Market
Military service members and their families are another large rental market. Tucson is notable for having a large military base, Davis-Monthan Air Force Base. That employs around eight thousand people. However, unlike some other metropolitan areas, the local economy is rather diversified, so the rise and fall of military spending won’t crater the Tucson real estate market.
Tucson's Large Student Market For Rental Property
The second-largest private employer in the city is the University of Arizona. That college has around 45,000 students. The law school and medical school associated with the university attract students from around the country. Colleges provide a steady stream of renters, whether you’re renting out a building full of efficiency apartments or a single-family home shared by several students. However, because Tucson’s economy is not tied to the rise and fall of the college, if enrollment did decline at the college, people moving to the area for work could move in. That makes the Tucson real estate market far more stable than your typical college town.
Rental rates have been steadily rising in the Tucson area and median new-home prices are increasing year-over-year. This has created a large permanent rental population that will take advantage of any affordable housing stock. Another factor in this equation is the limited supply of new housing in the price range most home buyers would be able to afford. There is a shortage of properties under $200,000 relative to demand, though the competition is stiff for properties at all levels except the $500,000 plus luxury market. This means that those who invest in the Tucson real estate market will guarantee that their property appreciates.
Tucson's Strong Job Growth Acceleration
We’ve already addressed the university and military base generating demand for rentals in the Tucson housing market. Another factor driving demand is a strong job market overall. Raytheon Missile Systems, for example, employs around 10,000 people. While Tucson isn’t the capital of Arizona, it is home to several governmental agencies. The US Customs and Border Protection division, for example, employs several thousand people in and around Tucson. The State of Arizona and Pima County each have several thousand jobs in this area, as well.
Despite a slowing of net natural change, population growth in the Tucson Housing Market Area accelerated since 2016 because of increased net in-migration. During the period from 2011 to 2016, the net in-migration was averaging 3,400 people annually while net natural change slowed to an average of 2,875 people a year. Even though the net natural change has slowed further, to an average of 1,500 people a year since 2016, population growth accelerated to an average of 8,750, or 0.9 percent, a year because net in-migration increased to an average of 7,250 people annually as job growth accelerated.
Tucson is Landlord Friendly
Arizona is incredibly landlord-friendly. Evictions are seamless. Arizona’s non-compliance laws require the tenant to pay rent and provide accurate information or else they are guilty of breaching the contract. If the tenant breaches their contract, the lease can be voided within ten days. Arizona has limited renters’ protections, but those are focused on residents in mobile homes. For example, there are payment grade period laws for those renting mobile homes but not those renting a condo or single-family home. There are limits on late fees charged on late rent for those in mobile homes, but not for those staying in an apartment or rented single-family home.
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