The Southwest region of the United States garners considerable interest from home buyers and real estate investors mostly due to its sunny climate, breathtaking landscapes, and affordable cost of living. At the heart of this region is Tucson — the second most populous Arizona city and a central hub for business.
As the national housing market takes a positive turn in 2024, market analysts look to Tucson with great expectations. So, will the Tucson real estate market be bracing for a pivotal shift like most of the country? Read on for a comprehensive Tucson housing market forecast 2024 and factors influencing the market.
Tucson Housing Market Trends
Over the past few years, the housing market in Tucson has seen a steady growth in property values and sales. Below is a detailed analysis of the Tucson housing market today:
Housing Prices in Tucson, AZ
According to tech real-estate marketplace Zillow, Tucson’s median home price was $324,114 in November 2023. This represented a marginal 0.2% year-over-year growth and marked the seventh consecutive month where the city recorded appreciation in real estate values.
The most expensive Tucson neighborhood is Starr Pass, with a median home price of $375,863. Homebuyers and investors on a budget are not lacking in choices, with numerous neighborhoods like Rose and Santa Cruz Southwest offering median home values of around $230,000.
Housing Inventory in Tucson, AZ
In a highly competitive real estate market, a steady housing supply is paramount to keep prices within reach for the average home buyer. In Tucson, the housing supply rose from May 2023 to November 2023 (the last recorded month).
The Federal Reserve Economic Data (FRED) data shows that the supply of Tucson listings grew from 1,608 units in May to 2,309 units by November 2023 — an impressive 43.6% increase.
The current dip in mortgage rates is the underlying cause, as it has spurred sellers to list their properties. As a result, this has widened buyers’ choices and is helping put a cap on price increases.
Days on Market: Tucson Real Estate
The longer it takes for a listed home to be in pending status, the more likely that property value growth will slow down. It will also be hard to resell a property as the demand is low. Extremely low days on the market (DOMs) also mean cutthroat competition where buyers are forced to pay above the asking price.
The Tucson housing market has maintained a healthy balance in terms of DOM. Figures from real estate company Redfin suggest that a typical Tucson home sold in 47 days in November 2023, six days faster than the previous year.
This shows the market is slowly moving towards a seller’s market but still has room for buyers to negotiate, making it ripe for investment opportunities.
Number of Homes Sold in Tucson, AZ
Tucson’s sales volume decreased by 5.1% in November 2023 compared to the previous year, even though housing supply is on an upward trajectory. Only 412 homes changed hands during this period, suggesting buyers may have held back due to the holiday season.
How Hot Is the Tucson Housing Market? Sale-to-List Price
A real estate market is only as hot as its sale-to-list price ratio, typically indicative of demand levels. If most homes are selling for the asking price or higher, it’s a strong indicator of a seller’s market and a promise of growth in property value. However, if the majority of homes are experiencing price drops, this raises a concern for buyers and investors.
According to Redfin data, Tucson’s average sale-to-list price ratio hit 98.6% in November 2023 — up 0.7% compared to the previous year. In addition, 24.3% (+ 7.0 pt year-over-year) of homes in Tucson sold for above the list price, and only 28.6% (- 3.6 pt year-over-year) had a price drop in November 2023, further solidifying its position as a desirable real estate market.
Tucson Migration and Relocation Trends
According to the Census Bureau, Tucson had a population of 542,629 in 2020. Estimates from the bureau also postulate a growth of around 0.73% since then, taking the city’s population to 546,574 by July 2023. The city will likely continue to witness the influx of new residents in the coming year.
During the months of September and November 2023, 54% of Tucson homebuyers chose to stay within the Tucson metropolitan area, while a marginally lower 46% sought to move out. 0.49% of homebuyers across the U.S.
expressed interest in moving into Tucson from outside metropolitan areas. Los Angeles led the way with the biggest share of potential home buyers in Tucson, followed by Seattle and San Francisco.
Tucson Housing Market Forecast in 2024
All things considered, it is safe to say that the Tucson housing market will stay on its upward trend in 2024. Wallet Investor expects a marginal annual percentage increase of +1.57% in Tucson’s median home price in 2024 and a +7.16% growth in five years.
Sales are expected to pick up again in 2024 as affordability improves and more properties come onto the market. However, a steady supply of housing inventory, sparked by the current dip in mortgage rates, will keep home prices in Tucson within reach.
Tucson Real Estate Investment: Should You Invest in Tucson?
The Tucson real estate market is favorable for investment in 2024. The city’s low entry price, steady appreciation in property values, and healthy market conditions match the country’s average, making it an ideal choice to diversify your real estate portfolio.
Also, the city’s real estate market is attractive for buy-and-hold investors due to consistent demand supported by a strong job market and affordable housing.
Is Now a Good Time to Buy a House in Tucson?
Now is the perfect time to buy a house in Tucson. The city is currently experiencing a balanced market, edging into a seller’s market, which gives homebuyers the upper hand during negotiations.
Additionally, the current low mortgage rates make it more affordable to purchase a home in Tucson than in previous years. While rates are expected to drop next year, the projected appreciation will likely counterbalance any potential savings.
A Snapshot of the Tucson Real Estate Market
Tucson is currently a balanced market, edging into a seller’s market. If you’ve been contemplating buying a home in Tucson, 2024 is the perfect time to make your move before the market shifts further in favor of sellers.
For informed investment decisions, work with an experienced Tucson real estate agent. Knowing the current market trends, demographic data, and Tucson housing market predictions will also help you make a wise real estate investment decision.
