The best cities offer a splendid blend of warm weather, beautiful natural wonders, plenty of job opportunities, and affordable cost of living. Tucson, AZ, is no exception.
If you love delicious food, fun outdoor activities, and rich cultures and are looking for a great place to live, Tucson is one of the best options to consider.
Many homebuyers and real estate investors believe the city is ideal for buying properties and moving there or starting a rental business.
Besides multiple real estate opportunities, Tucson also offers a robust job market, abundant sunshine, and many desert attractions that locals and tourists alike love.
However, after growing inflation hit even the country's hottest housing markets, is it still a good idea to buy a home in this city?
In order to make a sound decision, you should consider and analyze several aspects, including the latest Tucson housing market trends, experts' predictions, real estate statistics, and more.
Fortunately, you can find that information today! Here's a detailed overview of the Tucson real estate market and everything people need to know before investing in housing units there.
Tucson Housing Market Trends
According to Redfin, the Tucson housing market is somewhat competitive, as many residential properties sell for above the listing price and receive more than one offer before going pending.
However, the median price for a home in Tucson, AZ, fell in April 2023 compared to last year's figures. Does it mean the city's real estate market is losing competitiveness? Let's check other key trends to answer that question.
Median Sales Price in Tucson
Redfin's latest reports showed that the median sale price for all home types in Tucson, AZ, fell by 3.0% year over year to $321,500.
In April of last year, the median price for a housing unit in this city was $331,350.
However, the April 2023 median sales price in Tucson is considerably higher than in February and January of this year. Actually, it's the highest since December 2022.
According to Redfin's latest data, the number of housing units sold in Tucson also dropped, with just 645 going under contract in April 2023, after a decline of 32.1% from last year.
In April 2022, 950 homes were sold in this city, which means the number fell by over 300 housing units in one year.
However, the number of homes sold in April of this year shows a significant recovery compared to January and February.
Between November 2022 and February 2023, around 480 houses were sold each month. However, more homebuyers are now interested in purchasing residential properties in Tucson.
Around 22.4% of the city's listed housing units sold above the asking price in April 2023. That's a 32.3% drop compared to last year's figures.
Contrastingly, after the number rose by 8.3% from April 2022, 19.7% of residential properties were sold below the listing price.
Redfin also showed that the sale-to-list ratio fell by 98.7% in April 2023 after a 3.1% year-over-year drop for all home types.
According to the latest data published on Realtor.com, there are 3,232 homes for sale across Tucson, which is home to 172 neighborhoods.
Median Days on the Market
Redfin says that Tucson homes now spend at least 49 days on the market before going under contract. Compared to last year's figures, it's taking 17 more days to sell a residential unit in this city.
However, that's an improvement from February of this year. Back then, homes spent around 73 days on the market before owners and buyers signed the contract.
Using data collected in March 2023, SoFi published a list ranking each state by its foreclosure rate.
Arizona was ranked 25th with a foreclosure rate of one in every 5,659 housing units. The Grand Canyon State is home to 3,056,890 houses but only reported 541 foreclosure filings in March of this year.
Factors That Often Affect the Tucson Real Estate Market
Fluctuations and trends in a city's housing market don't happen suddenly but result from certain factors that influence the real estate sector. These are the main ones:
The Economy in Tucson
Did you know that different economic factors can affect any housing market? Overall, a healthy economy makes residents feel confident about their finances and more interested in buying a home.
Conversely, many people avoid real estate investments when the local economy is struggling or they don't have a solid income.
In Tucson, a city that greatly depends on the aerospace and defense sectors, the economy is resilient. Also, there are major employers there, which means people can find many job opportunities.
The latest report issued by the US Bureau of Labor Statistics revealed that the unemployment rate in Tucson remained unchanged from January to March of this year at 3.2%, which is below the national average.
In many cities, including Tucson, policies set by the local government also influence housing demand and prices. Tax credits, subsidies, and deductions are the factors with the greatest impact on the real estate market.
Changes in Demographics
Are more people moving to Tucson? Is this city attractive to retirees or employees looking for relocation? Major changes in population may also affect the housing market, impacting demand and prices.
People's age and income can define the demand for specific types of housing, for example. Migration patterns and population growth can also alter real estate market trends.
According to Redfin, 0.65% of property owners in outside metros planned to move into Tucson between February and April of this year.
Meanwhile, 62% of local homeowners wanted to stay within the city, and only 38% expected to leave.
Mortgage Interest Rates
Rising interest rates have also impacted the Arizona (AZ) housing market. This event has affected all states and their major cities, including Tucson.
In general, high mortgage interest rates make getting a loan to buy a property more challenging. As a result, properties lose affordability, and demand falls, which often causes a drop in prices.
However, the housing market begins to recover when mortgage interest rates are lower, as many people can obtain financing to buy a housing unit, driving demand and prices up.
The country's interest rates have reached record highs in recent months, averaging 6.39% for 30-year loans in May, Forbes said.
Is the Tucson Housing Market Likely to Crash Soon? What Do Experts Say?
Many people believe the Tucson real estate market will crash soon as the country heads into an inevitable recession. However, experts insist that it'll be less catastrophic.
Most analysts say that the market is not likely to crash. Instead, they expect a slowdown before the real estate sector starts to recover in 2024.
Additionally, experts claim the following signs show that the market won't crash this year:
Growing Housing Demand
As mentioned, migration patterns affect housing demand. Tucson is an attractive city for Hispanics, workers seeking relocation, and retirees. Therefore, many potential homebuyers are looking for the perfect property, which brings many opportunities for sellers.
Declining Housing Inventory
As demand increases, inventory falls. In most states, there is only a two-month supply of homes. In addition, the number of new listings dropped.
Overall, real estate markets crash when inventory exceeds demand. However, the latest trends show that that's unlikely to happen.
Fall in Foreclosure Filings
Arizona is the country's 25th state with the highest foreclosure rate, which means there is no risk of a foreclosure crisis in this area.
Additionally, foreclosure filings have dropped across the United States, as property owners have greater equity in their homes and stronger finances.
New Homes Don't Meet Demand
Experts also believe that it's impossible for home builders to get all the permits to build housing units quickly. In addition, even if they do, the number of newly constructed properties won't be enough to meet the growing demand.
As a result, analysts expect the housing inventory to remain low, which suggests that the real estate market won't crash.
Tucson Real Estate Market Statistics
Besides analyzing the latest housing market trends, it's also crucial to take a look at national and local statistics to determine if buying a home in Tucson could benefit your investment strategy.
Find the most important ones below:
- Redfin says that homes in Tucson get multiple offers, with average housing units going pending in 50 days, while hot properties require just 28 days.
- According to Redfin's latest reports, average homes in Tucson sell for 1% below the list price. However, hot real estate properties sell for approximately the asking price.
- Considering that Tucson homes spend around 49.5 days on the market before going under contract, Redfin gave this city a compete score of 49. In other words, it's considered "somewhat competitive."
- Realtor.com says home prices range from $5,000 to $12.5 million in Tucson.
- According to the latest data found on Realtor.com, the median listing home price in Tucson was $389,000.
- The same report showed that housing units sold for $340,500 in this city, which means the median sold price is almost $50,000 lower than the listing price.
- Realtor.com also says that the median listing home price per square foot is $226.
- The median price for a single-family home in Tucson was $335,000 in April after a 3.7% drop, according to Redfin's reports.
- The Tucson Association of Realtors said that the median sale price for a single-family home in this city rose by 17.9% to $385,000 in May 2022.
Tucson Housing Market Predictions
Many experts have specific predictions about the Tucson housing market.
Real estate database company Zillow predicts that upward trends in the city's housing market will continue this year, extending through 2024.
Analysts also say that home prices in the Tucson metropolitan statistical area (MSA) will rise by 3.2% in March 2024, driven by growing demand and low housing inventory.
However, many experts anticipate interest rates to continue to rise this year, which could cause a significant drop in demand, affordability, sales, and home prices.
Therefore, analysts advise buyers to be careful, as the current seller's market can benefit homeowners.
Tucson is a beautiful city with many opportunities for real estate investors and homebuyers. However, if you want to make a sound investment decision, you should consider certain aspects, such as the latest trends affecting the housing market.
If you have doubts about whether buying a property in this city is a good idea, remember that you can get guidance from a seasoned real estate agent.
Frequently Asked Questions
Is Tucson a Seller's Market?
Yes, it is! Since demand is high, and Tucson has a low housing inventory, the city is considered a seller's market that benefits homeowners.
Can Homebuyers Negotiate Home Prices in Tucson?
Negotiations are always an option. However, the current market benefits sellers more than buyers, as there are more people searching for homes than units for sale.
Therefore, homebuyers and real estate investors should study the market and consider different aspects, including their budgets and preferences, before purchasing a property in this city.