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Thinking about investing in Tucson real estate in 2025? You're on the right track.
Despite economic shifts, Tucson's property market shows promising stability and growth potential.
In this blog post, we will explore why investing in Tucson real estate is a wise decision.
We rely on solid, up-to-date data and statistics from trusted sources to guide our analysis.
By the end, we will share our own conclusions based on a comprehensive review of the data. Enjoy the read!
How this content was produced 🔎📝
This article offers thoughtful insights and analysis based on reliable sources, but it should not be considered financial advice. We work hard to research, compile, and analyze data to give you a well-informed perspective. However, as you can guess, our analysis involves subjective choices, such as source selection and methods, and it cannot fully capture the market's complexity. Please, always do your own research, consult professionals, and make decisions based on your own judgment. Any financial risks or losses are your responsibility. Additionally, you should know that we have no affiliation with the sources mentioned, ensuring our analysis is completely impartial.
1) Tucson's "vacancy rate" of 9.5% shows the market is highly occupied and competitive
Signal strength: strong
The vacancy rate in Tucson is 9.5%, which is considered very low. This low vacancy rate indicates that the market is highly occupied and competitive, suggesting strong demand for rental properties.
When demand is high, it often means that rental properties are quickly filled, making it easier for property owners to find tenants. In Tucson, well-maintained single-family homes in the central neighborhoods are particularly sought after by renters.
Investing in such properties can be a wise decision because they are easily rented out, ensuring a steady income stream. However, if the vacancy rate were to rise significantly, say above 15%, it might indicate an oversupply of rental properties.
Sources: NeighborhoodScout, DataUSA, USCensus
2) Tucson's "livability score" of 73 indicates a favorable quality of life
Signal strength: moderate
The fact that the livability score in Tucson is 73 is a positive indicator for real estate investment. This score reflects a combination of factors that make Tucson an attractive place to live.
Firstly, Tucson boasts over 350 days of sunshine annually, which is a major draw for those seeking a warm climate. Secondly, the city is home to the University of Arizona, providing a vibrant cultural scene and a steady influx of students and staff. Thirdly, Tucson's proximity to stunning natural landscapes, such as the Saguaro National Park, enhances its appeal for outdoor enthusiasts.
These characteristics contribute to the city's overall livability, making it a desirable location for potential residents. As a result, investing in property here is likely to yield positive returns.
However, if the livability score were to drop below 60 due to significant changes in these factors, it might signal a less favorable investment environment.
Source: AreaVibes
We created this infographic to show how property prices in Tucson compare to other big cities in Arizona. It shows the median price as well as the price per sqft, making it easy to see which places might offer the best value. We hope you find it helpful.
3) By 2026, Tucson's infrastructure projects, like the I-10 and Valencia Road upgrades, are expected to increase real estate values
Signal strength: moderate
Several infrastructure projects in Tucson, Arizona, are poised to boost real estate values by 2026, making property investment in the area a promising opportunity.
The $171-million I-10 project, which includes the reconstruction of the Sunset Road interchange, is expected to be completed in 2025. This project will feature an eastward connection to River Road with a new Pima County-funded bridge that will carry traffic over the Union Pacific railroad tracks and the Rillito River. This upgrade will enhance travel in the southern Arizona region and potentially increase property values along the I-10 corridor.
The Valencia Road Improvement Project, scheduled to begin on November 11, 2024, will widen Valencia Road from Kolb Road to Houghton Road into a six-lane roadway with landscaped median islands, drainage improvements, bicycle and pedestrian facilities, lighting, and public art. The project is expected to be completed in mid-2026. This improvement will enhance the area's accessibility and could boost real estate values in the surrounding neighborhoods.
Grant Road Phases 3 and 4, which started in the spring of 2024, involves improving Grant Road from Palo Verde Boulevard to Venice Place. The completed project will include six travel lanes, landscaped medians, buffered bike lanes, sidewalks, transit stop upgrades, and drainage improvements. It is expected to be completed in 2026. This upgrade will improve traffic flow and safety, potentially increasing property values along Grant Road.
The I-10 International commercial real estate project, located at the southeast corner of Alvernon Way and Los Reales Road in Tucson, is expected to be completed in Q4 2025. The project includes a 560,000 square foot warehouse/distribution facility that will take advantage of its proximity to Interstates 10 and 19, and Tucson International Airport. This development could boost real estate values in the area by providing direct connections to major ports and cities in the U.S. and Mexico.
Sources: ENR, AZ Big Media, RTA Mobility, Tucson AZ
4) Tucson's population is on the rise, experiencing a 0.7% growth
Signal strength: moderate
The population growth in Tucson, Arizona, is a key indicator of potential investment opportunities in the real estate market. A 0.7% increase in the Tucson Metropolitan Statistical Area (MSA) population in 2023, reaching 1,080,300 residents, suggests a steady demand for housing and infrastructure.
Investing in property in a growing area like Tucson can be advantageous due to the increased demand for housing. As more people move to the area, the need for residential properties rises, potentially driving up property values and rental prices. This trend is supported by the modest growth in the city of Tucson itself, which saw an increase of 739 residents (0.14%) from 2022 to 2023, reaching a population of 547,239.
Long-term trends also highlight Tucson's consistent population growth. From 2000 to 2023, the population grew by 60,134, with an average annual growth rate of 0.54%. Although there was a slight decline after peaking in 2019, the population resumed growth, indicating a resilient market. The forecast for 2035, with an expected population of 583,352, further underscores the potential for continued demand in the housing market.
Looking ahead to 2053, projections suggest Tucson’s population could reach approximately 1.3 million, albeit at a slower growth rate due to demographic shifts. This long-term growth potential makes Tucson an attractive location for real estate investment, as it indicates a sustained need for housing and related services.
Sources: MapAZ Dashboard, Plan Tucson, Neilsberg Insights, Macrotrends, NCH Stats
Our team designed this infographic to show how competitive the real estate market in Tucson is vs. other major cities in Arizona. It shows the percentage of sales above the list price, a key indicator of market competition.
5) Airbnb or short-term rentals in Tucson offer a "moderately attractive" profit margin of 4.0%
Signal strength: moderate
The cash-on-cash return on Airbnb in Tucson is 4.0%, which is considered moderately attractive for investors. This means that for every dollar you invest, you can expect a return of 4 cents annually from rental income, which is a decent return compared to other markets.
Tucson attracts a variety of short-term tenants, including university students, visiting professors, and tourists who are drawn to its unique desert landscape and cultural events. These groups often seek short-term accommodations, making Airbnb properties a popular choice for their stays.
Additionally, Tucson hosts numerous festivals and events throughout the year, such as the Tucson Gem and Mineral Show, which brings in a significant number of visitors. This consistent influx of tourists and event-goers creates a steady demand for short-term rentals, enhancing the potential for rental income.
If the cash-on-cash return were to drop below 2.0%, it might indicate a less favorable investment opportunity, as the returns would not be as competitive compared to other markets.
Source: Mashvisor
6) The "cash-on-cash return" of 5.0% for long-term rentals in Tucson is fairly appealing
Signal strength: moderate
The cash-on-cash return of 5.0% in Tucson indicates that the property is generating a decent return on the initial investment. This percentage is a measure of the annual return the investor can expect, based on the cash invested, and a 5.0% return is considered moderately attractive in the real estate market.
In Tucson, the rental market is supported by a steady demand from long-term tenants such as university students and faculty, given the presence of the University of Arizona. Additionally, retirees and military personnel from nearby bases also contribute to the demand for rental properties, ensuring a stable tenant base.
These groups often seek long-term rental agreements, providing consistent rental income for property owners. This stability in tenant demand, combined with the moderately attractive cash-on-cash return, makes Tucson a promising market for real estate investment.
If the cash-on-cash return were to drop below 3.0%, it might indicate that the investment is less favorable, as the returns would not justify the risks involved.
Source: Mashvisor
This infographic we have made will show you how market values have changed during the last decade in Tucson vs other major places in Arizona. Here, the percentage increase or decrease in market value will help you see long-term trends.
7) Tucson's median home price is 25% lower than the "national average," making it more affordable
Signal strength: minimal
The fact that Tucson still has a median home price 25% below the national average suggests that there is room for growth in property values. This makes it an attractive market for investors looking to capitalize on potential appreciation.
In Tucson, the most expensive properties are likely to be luxury homes in areas like the Catalina Foothills, where scenic views and upscale amenities drive up prices. On the other hand, the cheapest properties are often small, older homes in neighborhoods like South Tucson, where prices are more accessible for budget-conscious buyers.
Investing in Tucson real estate could be a wise decision, especially if you focus on areas with strong growth potential and increasing demand. The city's affordability compared to the national average provides a cushion for investors.
If the median home price in Tucson were to rise to above the national average, it might indicate that the market is becoming less favorable for investment.
Source: Zillow
So, is investing in real estate in Tucson a solid option in 2025? Absolutely!
Investing in Tucson's real estate market in 2025 is a promising opportunity. The city's low vacancy rate of 9.5% indicates a bustling and competitive market, ensuring strong demand for rental properties. This means that property owners can expect a steady stream of tenants, particularly for well-maintained homes in central neighborhoods.
Moreover, Tucson's livability score of 73 highlights its favorable quality of life, with abundant sunshine, a vibrant cultural scene, and proximity to natural attractions. These factors make it an attractive place to live, further boosting the demand for housing. Additionally, upcoming infrastructure projects, such as the I-10 and Valencia Road upgrades, are expected to enhance accessibility and increase property values by 2026.
The city's population is also on the rise, with a 0.7% growth in 2023, indicating a sustained demand for housing. This growth, coupled with a cash-on-cash return of 5.0% for long-term rentals, makes Tucson a stable and appealing market for investors. Lastly, with a median home price 25% below the national average, Tucson offers affordability and potential for property value appreciation. All these factors combined make investing in Tucson real estate a wise choice in 2025.
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