Our industry specialist has reviewed and approved the final article. Also, some of the data presented here have been integrated into the Tucson real estate spreadsheet template.
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Expecting a decrease in Tucson's prices in 2025? Think again.
Even with changes in the market, Tucson's demand is high and supply is tight, pushing prices up.
Let's explore the reasons why costs in this city are set to rise in 2025.
This article gives you valuable insights, but remember, it’s not and will never be investment advice. We pull data from a range of sources to provide you with the most accurate picture possible, yet we can’t guarantee complete accuracy. Markets are difficult to predict. Make sure to do your own research and consult a professional before making any financial moves. Any risks or losses are your own responsibility.
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1) In Tucson, there are about 0.45 homes for each person, which is quite limited
Signal strength: strong
The fact that there is around 0.45 home per inhabitant in Tucson indicates a relatively low housing availability. This low ratio suggests that housing demand is likely to exceed supply, which often leads to an increase in housing prices. In Tucson, a unique factor is the University of Arizona's presence, which attracts students, faculty, and staff, all needing housing.
With the university's influence, there is a constant influx of people seeking accommodation, further tightening the housing market. Additionally, Tucson's appealing climate and lifestyle draw retirees and remote workers, adding to the demand. As more people move to Tucson for these reasons, the pressure on the housing market is likely to increase, pushing prices up.
However, if the ratio of homes per inhabitant were to increase to around 0.6 or higher, it might indicate a more balanced market. In such a scenario, the pressure on housing prices might ease, potentially stabilizing or even reducing prices.
Source: USCensus
2) Three major websites confidently predict that home prices in Tucson will rise in 2025
Signal strength: strong
There are currently three major websites forecasting a positive growth for home prices in Tucson in 2025, which is a promising signal for potential investors.
Among these forecasts, Realtor is the most optimistic with a projected increase of 12.40% in home prices, followed by Redfin at 4% growth. Zillow, while still positive, predicts a more modest increase of 0.30% for home price changes in 2025.
The significant gap between these forecasts suggests that while the trend is upward, the degree of growth is uncertain. It's important to remember that these predictions should be taken with caution, as they are based on current data and assumptions.
We will also rely on strong, reliable, and actual data to make a professional judgment. If all three forecasts were to predict a decline, it would signal a potential downturn in the market.
Sources: ZillowForecasts, RedfinForecasts, RealtorForecasts
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3) Tucson's of 9.5% shows the market is highly occupied and competitive
Signal strength: moderate
The vacancy rate in Tucson is currently at 9.5%, which is considered very low. This low vacancy rate indicates that the housing market is highly occupied and competitive, meaning there is strong demand for housing.
When demand is high and supply is limited, prices tend to rise as more people compete for fewer available homes. In Tucson, properties that are easily rented are often well-maintained single-family homes located in desirable areas like the Catalina Foothills.
These homes are attractive to renters due to their proximity to amenities and good schools, making them a popular choice. If the vacancy rate were to increase significantly, say to 15% or higher, it would suggest a less competitive market and potentially stabilize or decrease housing prices.
Sources: NeighborhoodScout, DataUSA, USCensus
4) Tucson has a "Livability" score of 73, which indicates it's a good place to live
Signal strength: moderate
The livability score of 73 in Tucson is considered good because it reflects a balance of factors that make the city attractive to residents. This score indicates that Tucson offers a quality of life that is appealing, which can drive demand for housing.
One specific characteristic contributing to this score is Tucson's pleasant climate, with over 300 days of sunshine annually, making it a desirable place to live. Additionally, Tucson is known for its vibrant cultural scene, including events like the Tucson Gem and Mineral Show, which attracts visitors and potential residents. Furthermore, the city boasts a strong educational presence with the University of Arizona, which not only brings students but also faculty and staff seeking housing.
These factors combined suggest that the demand for housing in Tucson is likely to increase, potentially driving up prices by 2025. When a city is seen as a good place to live, more people want to move there, which can lead to higher housing prices.
However, if the livability score were to drop below 60, it might indicate declining conditions, which could deter new residents and potentially stabilize or decrease housing prices.
Source: AreaVibes
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5) In Tucson, home prices have risen by an average of 9.3% annually over the past decade
Signal strength: moderate
The fact that home prices in Tucson have appreciated at an average rate of 9.3% over the last decade is a noteworthy signal for potential investors. This historical growth rate suggests that there has been a consistent demand and upward trend in housing prices, which can be a positive indicator for future price increases.
While this 10-year average appreciation rate points to favorable conditions, it's important to remember that past performance doesn't guarantee future results. However, such a strong historical trend can still be a valuable piece of information when considering investment opportunities.
Investors should consider this data as part of a broader analysis, as other factors like economic conditions and market demand will also play a crucial role in future price movements. If the appreciation rate were to drop significantly, say below 3% over a similar period, it might suggest a different market dynamic.
Source: NeighborhoodScout
6) Tucson's median home price remains 25% lower than the "national average."
Signal strength: minimal
The fact that Tucson's median home price is 25% below the national average suggests that there is room for growth in the housing market. When a market is priced lower than the national average, it often attracts investors and homebuyers looking for affordability, which can drive up demand and prices.
In Tucson, the most expensive properties are likely to be luxury homes in areas like the Catalina Foothills, where scenic views and upscale amenities are highly sought after. On the other hand, the cheapest properties might be small, older homes in neighborhoods like South Tucson, where prices are more accessible but the area may lack some of the amenities found in more expensive regions.
As demand increases, these lower-priced homes can see significant appreciation, making them attractive investments for those looking to enter the market. This potential for growth is a key reason why many believe housing prices in Tucson will rise by 2025.
If Tucson's median home price were to exceed the national average by a significant margin, it might indicate that the market has become overvalued, potentially signaling a different trend.
Source: Zillow
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7) In Tucson, about one in five homes sell for more than their listing price
Signal strength: minimal
In Tucson, around 20% of sales close at a price higher than the listing price, which is a strong indicator of demand. When buyers are willing to pay more than the asking price, it often means that competition among buyers is high and they are eager to secure a property.
This kind of market behavior suggests that housing demand is outpacing supply, which typically leads to an increase in prices. As more buyers compete for fewer homes, prices are likely to rise as sellers take advantage of the situation.
For someone considering investing in real estate, this trend can be a signal that property values might appreciate in the near future. However, if the percentage of sales closing above the listing price were to drop significantly, say to below 5%, it might indicate a cooling market.
Source: Zillow
So, are prices going to climb in Tucson by 2025? Absolutely
In Tucson, the housing market is poised for a price increase by 2025 due to several compelling factors.
Firstly, the city has a low housing availability with 0.45 homes per person, indicating that demand is likely to exceed supply. The presence of the University of Arizona and Tucson's appealing climate further attract a constant influx of people, tightening the market. Additionally, the 9.5% vacancy rate shows a highly occupied and competitive market, which typically leads to rising prices.
Moreover, three major websites predict a positive growth in home prices, with Realtor forecasting a 12.40% increase. Tucson's livability score of 73 and a historical appreciation rate of 9.3% annually over the past decade further support this trend. With the median home price 25% below the national average, there is room for growth, attracting investors and homebuyers. All these factors combined suggest that housing prices in Tucson are set to rise by 2025.