Despite fluctuations in market dynamics, the data indicates that home prices in Tucson are not dropping. With a months of supply standing at 3.51, the Tucson Housing market appears to maintain a balanced equilibrium between supply and demand. However, it's essential to consider other factors such as median days on market and average percentage over asking price.
While the median days on market have decreased to 26, indicating a faster turnover of properties, the average percentage over asking price currently stands at -2.07%, suggesting a slight softening in the market. This combination suggests that buyers may have some negotiating power, particularly in certain segments of the market. However, with prices continuing to appreciate, sellers still hold a favorable position overall.
Current Tucson Housing Market Trends
According to the Tucson Association of Realtors, in January, the Tucson housing market witnessed 873 home sales, marking a 3.1% decrease compared to the previous year. However, despite this slight dip in sales volume, the total sales volume for the month stood at a noteworthy $367,121,441, reflecting a 2.2% increase from the preceding year. The price per square foot ($/sqft) surged to $225, indicating an 8.4% hike from the previous year's figures.
When it comes to the median sale price, January boasted a $352,500 median, marking an 8.0% uptick from the previous year. Similarly, the average sale price witnessed a 5.5% increase, reaching $420,529. These figures underscore the robust nature of the Tucson housing market, with prices showing a consistent upward trend.
Market Dynamics: Supply and Demand
Examining the supply side, the number of new listings (1,722) showcased an increase of 165 compared to the previous year. However, on the demand side, the number of new pendings experienced a slight decrease, standing at 980, down 62 from the previous year.
One crucial metric for assessing market equilibrium is the months of supply, which currently stands at 3.51. This figure indicates the number of months it would take to sell off the existing inventory if no new properties were added to the market. With an active listings count of 3,062, the market seems to maintain a balanced equilibrium between supply and demand.
Market Sentiment: Trends and Outlook
Despite the slight fluctuations in sales volume and new listings, the Tucson housing market continues to exhibit resilience and growth. The steady appreciation in median and average sale prices reflects strong consumer confidence and sustained demand for properties in the region.
Moreover, the decrease in median days on market (26, down 6 from the previous year) suggests that properties are selling faster, indicating a competitive market environment. However, it's essential to note the average percentage over asking price, which currently stands at -2.07%, down 0.40% from the previous year. This indicates a slight softening in the market, offering opportunities for buyers to negotiate favorable deals.
It's evident that despite fluctuations, the overall trajectory remains positive. Homebuyers and investors alike can capitalize on the current trends to make informed decisions tailored to their unique needs and preferences. With a dynamic landscape and promising outlook, the Tucson real estate market continues to offer lucrative opportunities for those seeking to invest or purchase property in the region.
Tucson Housing Market Forecast for 2024 and 2025
According to Zillow, the average home value in Tucson stands at $327,123, reflecting a 3.1% increase over the past year, with properties typically going pending in approximately 21 days.
Understanding Housing Metrics
The Tucson housing market is characterized by distinct metrics that offer insights into various aspects of its performance. As of February 29, 2024, there were 1,918 homes listed for sale, accompanied by 676 new listings. The median sale to list ratio, a key indicator of market competitiveness, stood at 0.995 as of January 31, 2024. During the same period, the median sale price was $314,623, while the median list price reached $372,967. Additionally, 22.5% of sales were recorded over list price, with 50.7% of sales transacting under list price.
The Tucson MSA Housing Market Forecast
Looking ahead, the Tucson Metropolitan Statistical Area (MSA) presents a promising outlook. Forecast data from Zillow projects a gradual appreciation in home values. As of February 29, 2024, the forecast predicts a 0.1% increase by March 31, 2024, followed by a 0.6% rise by May 31, 2024. By February 28, 2025, the market is anticipated to experience a 2.1% increase, indicating sustained growth over the forecast period.
The Tucson MSA encompasses Pima County and parts of Pinal County, constituting a significant portion of the Arizona housing market. With its population centers, diverse economy, and cultural attractions, Tucson's housing market plays a central role in the region's real estate landscape. The MSA's housing market is characterized by a mix of single-family homes, condominiums, and townhouses, catering to varied preferences among homebuyers.
Are Home Prices Dropping in Tucson?
As of the latest data available, there is no indication of declining home prices in Tucson. On the contrary, the market has experienced steady appreciation over the past year, with the median sale price reflecting this upward trend. Factors such as limited inventory, high demand, and favorable economic conditions contribute to the resilience of home prices in the region.
Will the Tucson Housing Market Crash?
Speculation about a housing market crash in Tucson remains just that – speculation. While market fluctuations are always a possibility, current indicators point to a stable and resilient market. The region's economic diversification, population growth, and continued demand for housing suggest that any potential downturn would likely be moderate rather than catastrophic. However, it's essential for buyers, sellers, and investors to remain cautious and stay informed about market trends.
Is Now a Good Time to Buy a House in Tucson?
For those considering purchasing a home in Tucson, the current market presents both opportunities and challenges. While low inventory and competitive conditions may deter some buyers, others may find value in favorable mortgage rates and the prospect of long-term appreciation. Ultimately, whether now is a good time to buy a house depends on individual circumstances, financial readiness, and long-term goals. Consulting with a knowledgeable real estate agent and conducting thorough research can help buyers make informed decisions tailored to their needs.
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.
References
Latest Market Data, Trends, and Statistics
https://www.tucsonrealtors.org/mlssaz/mls_statistics
https://www.neighborhoodscout.com/az/tucson/real-estate
https://www.zillow.com/tucson-az/home-values
https://www.realtor.com/realestateandhomes-search/Tucson_AZ/overview
Student market
http://worldpopulationreview.com/us-cities/tuscon-population/
https://en.wikipedia.org/wiki/University_of_Arizona
Snowbirds
http://arizonasonoranewsservice.com/snowbirds
https://www.azpm.org/s/33899-snowbirds-no-more-seasonal-residency-shrinking-in-tucson
Landlord friendly
https://morrisinvest.com/blog/2016/12/21/5-most-landlord-friendly-states
https://www.avail.co/education/laws/arizona-landlord-tenant-laws
New Construction & Population Growth
https://www.huduser.gov/portal/publications/pdf/TucsonAZ-CHMA-19.pdf