Southern Arizona's real estate market has been booming, and housing experts predict high growth in the Tucson housing market in 2022, albeit at a more moderate level than last year. Tucson's real estate market made headlines a decade ago for reaching incredible highs before the average home value was cut in half. However, its slow recovery has gone unnoticed by the media and investors alike. With a strong economy and low mortgage rates, buyer activity has been strong in this region. The housing inventory levels are still below historical norms. With supply and demand continuing to favor sellers prices continue to rise in the Tucson real estate market.
The Tucson housing market is seeing moderately strong demand, but it is nowhere near the insanely overheated conditions it saw in the 2008 housing bust. Last year, the Tucson housing market proved to be very robust, finishing the year on a high note. In most market divisions and across most of the country, home sales and prices were higher than in 2019. Seller activity recovered significantly from the COVID-19 spring decline, but overall activity was still insufficient to build up the supply of homes for sale.
The residential real estate activity in the Tucson Association of REALTORS® service area was strong in February 2022. Home prices are up compared to last year. The year-to-date median sales price for a single-family home is $354,999, up 22.4% from last year. From Jan to Feb, a total of 2,059 single-family homes have been sold, which is a slight decrease of 0.6% from 2021. Sellers received, on average, 100.1% percent of their original list price at sale, a year-over-year improvement of 0.4 percent. A slight decline in sales can be attributed to an uptick in mortgage interest rates, briefly exceeding 4% in February, the highest level since May 2019.
Tucson Housing Market Trends 2022
Tucson is currently a hot seller’s real estate market – which means that the demand from buyers is exceeding the current supply of homes for sale. The pricing of homes is trending higher and is more attractive for sellers in the current phase. The shortage of supply and an increase in the demand for housing will push the prices higher in the Tucson housing market. Months Supply of Inventory for single-family homes was just 0.7 in February, which means it will take less than three weeks for the current inventory of homes on the market to sell given the current sales pace.
In 2022, signs indicate that buyer demand will remain high, and constrained availability will continue to encourage multiple offers and higher prices across much of the housing inventory. Mortgage rates are rising higher (close to 4%), which may push buyers to act quickly and lock in their housing costs for the long term. According to Realtor.com, in February 2022, the Tucson housing market was a seller's market, which means there were roughly more buyers than there were active homes for sale. Demand outpaced the supply for favoring sellers in the region. The median list price was $336.3K, trending up 20.5% year-over-year.
Tucson is a city in and the county seat of Pima County, Arizona, United States, and is home to the University of Arizona. The median list price of homes in Pima County, AZ was $350K, trending up 18.6% year-over-year. The median listing price per square foot was $205. The median sale price was $336,000. Ideally, a buyer would prefer a sale to ask price ratio that’s closer to 90%. The sellers in Pima County have managed to hold good leverage in these negotiations in the past month as the Sale-to-List Price Ratio was 100%. Homes in Pima County sold for approximately the asking price on average. A seller would always prefer scenarios that can yield a ratio of 100% or higher.
- There are 37 cities in Pima County, where Realtor.com has active listings.
- Tanque Verde has a median listing price of $699K, making it the most expensive city.
- Flowing Wells is the most affordable city, with a median listing price of $239,500.
- Tucson has a median listing price of $336.3K, trending up 20.5% year-over-year.
- In Tucson, Sam Hughes has a median listing price of $580K, making it the most expensive neighborhood.
- Hedrick Acres is the most affordable neighborhood in Tucson, with a median listing price of $172K.
The following market report compares key housing metrics of February 2022 with February 2021. This report covers residential real estate activity in the Tucson Association of REALTORS service area. Percent changes are calculated using rounded figures.
- Closed Sales decreased 0.7 percent for Single Family but increased 3.8 percent for Townhouse/Condo.
- Pending Sales increased 1.1 percent for Single Family and 12.3 percent for Townhouse/Condo.
- New Listings decreased 10.0 percent for Single Family and 4.6 percent for Townhouse/Condo.
- Inventory decreased 3.2 percent for Single Family and 39.4 percent for Townhouse/Condo.
- Median Sales Price increased 23.4 percent to $356,500 for Single Family and 21.5 percent to $249,000 for Townhouse/Condo.
- Days on Market decreased 3.8 percent for Single Family and 23.8 percent for Townhouse/Condo.
- Months Supply of Inventory decreased 12.5 percent for Single Family and 42.9 percent for Townhouse/Condo.
Tucson Real Estate Market Forecast 2022
What are the Tucson real estate market predictions for 2022? Tucson's housing market is shaping up to continue the trend of the last few years as one of the hottest markets in the nation. Let us look at the price trends recorded by Zillow (a real estate database company) over the past few years. The Tucson house prices remained almost flat for a short period between 2014 to 2015. Since 2016, the typical home value in Tucson has appreciated by around 91% (Zillow Home Value Index).
The current typical value of homes in Tucson is $305,752. This value is seasonally adjusted and only includes the middle price tier of homes. Tucson home values have gone up 23.3% over the past year, which is a massive rate of appreciation in one year. Tucson is a sizzling seller’s market. The population in the Tucson Metropolitan Statistical Area (MSA) increased by 0.7% in 2020, bringing the total population to 1,044,675 residents.
- The typical value of homes in Tucson Metro is $321,613, up 23.6% over the past year.
- The home prices will continue to rise over the next twelve months.
- Pima County home values have gone up 23.6% (current = $321,613) over the past year and will continue to rise in the next twelve months.
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 in 2022. 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 in 2021 & 2022? 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
The average detached single-family home can be bought for less than $300,000, though prices rose 21% year-over-year. Duplex units cost around $130,000 each. Townhome units cost around $80,000 each when found in groups of three or more. RVs can be found for less than $40,000, while snowbirds provide an instant market for renting out these cheap, low-maintenance properties. Demand in this area is so great that some are advocating the construction of new RV parks to help the Tucson economy. Relatively affordable housing attracts people to Tucson from Los Angeles and San Diego Counties in California.
The average home sales prices are approximately 60 percent lower in the Tucson housing market. Tucson's real estate market is thriving, and many people would like to call it home. Tucson rental property investment not only provides you with monthly income but is also a long-term investment. The average apartment rent in Tucson is $1,059, a 14% increase compared to the previous year. Many people move to Tucson and then commute to work in surrounding cities. Tucson’s relatively slow and steady growth rate means that new construction is at a crawl.
That is causing rents to rise faster than average, especially at the low end of the market. Another factor propping up home prices is the relatively small inventory on the market; snowbirds typically sell when they need to instead of based on market conditions. The average size for a Tucson, AZ apartment is 762 square feet, but this number varies greatly depending on unit type, with cheap and luxury alternatives for houses and apartments alike. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.
Tucson real estate appreciated 82.08% over the last ten years, which is an average annual home appreciation rate of 6.18%, putting Tucson in the top 10% nationally for real estate appreciation, according to NeighborhoodScout's data. Many investors believe that single-family homes are the best choice for a Tucson rental property. That is because they appreciate more over time compared to other types of properties. When you own a rental property in Tucson, you aren’t just making income from the month to rent a month. You have a long-term investment that will pay off down the road.
The Massive Seasonal Market
Like that of Phoenix, the Tucson real estate market sees a massive influx of snowbirds, 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.
As of April 3, 2022, the average rent for a 1-bedroom apartment in Tucson, AZ, is $919. This is a 23% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Tucson increased by 4% to $761. The average rent for a 1-bedroom apartment increased by 3% to $919, and the average rent for a 2-bedroom apartment remained flat.
- The average rent for a 2-bedroom apartment in Tucson, AZ is currently $1,200. This is a 20% increase compared to the previous year.
- The average rent for a 3-bedroom apartment in Tucson, AZ is currently $1,795. This is a 21% increase compared to the previous year.
- The average rent for a 4-bedroom apartment in Tucson, AZ is currently $1,915. This is a 13% increase compared to the previous year.
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.
The Tucson Area’s Demographic Momentum
The median age of Tucson residents is 33.2, several years lower than the national median age of 37-38. A large number of students try to find work in the area, and many start their families here. Growth is a steady 1%, a little higher than the national 0.7% growth rate. However, Tucson is notable for the sheer number of people moving to the city from around the country, adding to the population and nearly guaranteeing their children will remain here. That is aside from the slow but steady international migrants to the area, as well.
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.
The Tucson real estate investing market has recovered and is poised for slow, steady, and certain long-term growth. The shifting demographics and known groups eager to sell at the right price provide an excellent opportunity to find bargains almost anywhere in the Tucson real estate market. An investment property that costs $150,000 is what some experts recommend starting with.
Good cash flow from Tucson investment properties means the investment is, needless to say, profitable. A bad cash flow, on the other hand, means you won’t have money on hand to repay your debt. Therefore, finding the best investment property in Tucson in a growing neighborhood would be key to your success. If you invest wisely in Tucson's real estate, you could secure your future. As with any real estate purchase, act wisely. Evaluate the specifics of the Tucson housing market at the time you intend to purchase.
When looking for the best real estate investments in Tucson, you should focus on neighborhoods with relatively high population density and employment growth. Both of them translate into high demand for housing. Some of the best neighborhoods in or around Tucson, Arizona are Rancho Vistoso, Continental Ranch, Catalina Foothills, Central Tucson, El Montevideo, Landsdale, Rincon Vista at Rita Ranch, Sycamore Park Village, Rosemont West, Broadmoor-Broadway, El Encanto Estates, Desert Aire-Loma Linda, Peter Howell, Vista Montana Estates, Highland Vista Cinco Via, and San Clemente.
Buying or selling real estate, for a majority of investors, is one of the most important decisions they will make. Choosing a real estate professional/counselor continues to be a vital part of this process. They are well-informed about critical factors that affect your specific market areas, such as changes in market conditions, market forecasts, consumer attitudes, best locations, timing, and interest rates.
NORADA REAL ESTATE INVESTMENTS has extensive experience investing in turnkey real estate and cash-flow properties. We strive to set the standard for our industry and inspire others by raising the bar on providing exceptional real estate investment opportunities in many other growth markets in the United States. We can help you succeed by minimizing risk and maximizing the profitability of your investment property in Tucson.
Consult with one of the investment counselors who can help build you a custom portfolio of turnkey properties. These are “Cash-Flow Rental Properties” located in the various growing housing market of the country.
All you have to do is fill up this form and schedule a consultation at your convenience. We’re standing by to help you take the guesswork out of real estate investing. By researching and structuring complete Tucson turnkey real estate investments, we help you succeed by minimizing risk and maximizing profitability.
Apart from the Tucson market, you can also invest in the Phoenix real estate market. Phoenix is a hot place for real estate investment. Phoenix deals with a large retiree population, both permanent and seasonal. To accommodate aging in place, they’ve loosened the rules on building “accessory dwelling units”, commonly known as mother-in-law suites. The city also recognizes the need for affordable housing, and they allow people to build and rent out ADUs as affordable housing, especially if the property is within walking distance of public transit.
Buy a house, rehab it, and build a granny flat, and you have two rental properties for not much more than the price of one. And the city is almost certain to approve it because they want denser development. The second real estate market in the state of Arizona lies in the city of Scottsdale. If you are an investor, Scottsdale has a track record of being one of the best long-term real estate investments in the nation. You’ll see better than average returns on the average Scottsdale real estate investment property, and its value will be bolstered by a variety of factors. This makes Scottsdale a little better choice for investors than Phoenix.
Chandler is another hot real estate market bordered by Tempe, Mesa, and Phoenix. The Chandler housing market is home to a decently sized student population, but its economy isn’t dependent on the rise and fall of one school. The Chandler-Gilbert Community College system caters to local students. Western International University and Ottawa University have campuses here. The massive Arizona State University campus in Tempe is only fourteen miles away. An affordable Chandler real estate investment property that can advertise a ten-minute drive to that campus will see a steady stream of students signing up.
Let us know which real estate markets you consider best for real estate investing!
Remember, caveat emptor still applies when buying a property anywhere. Some of the information contained in this article was pulled from third-party sites mentioned under references. Although the information is believed to be reliable, Norada Real Estate Investments makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. All information presented should be independently verified through the references given below. As a general policy, Norada Real Estate Investments makes no claims or assertions about the future housing market conditions across the US.
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