The real estate market in Arizona is already booming in 2019 and experts are seeing positive trends in numerous cities across the state. While Phoenix and Scottsdale almost consistently make headlines as top places to invest in real estate, Tucson has been overlooked by investors. The Tucson real estate market, however, has been slowly growing and now has excellent long-term prospects for real estate investing. Let’s take a look at the Tucson housing market 2019 trends to see why you should consider buying a rental property here.
Strong Economic Indicators
Metropolitan Tucson is home to around one million residents. This population increases dramatically between December and March when Snow Birds fly south to enjoy the city’s pleasant winter. According to the PwC’s Emerging Trends in Real Estate 2019 report, Tucson’s population growth rate is behind those seen in the rest of the Mountain Region, but it’s still equal to the national rate.
New residents flock to the Tucson real estate market for many reasons. The city attracts families for its low cost of living and impressive job market. Tucson is also an attractive destination for baby boomers who are in their retirement years. Moreover, the University of Arizona’s campus is located in a residential area of Tucson and it has around 45,000 students that come from around the country. For a real estate investor, colleges provide a steady stream of rental demand, whether you’re renting out apartments or a single-family home shared by several students.
Related: How to Rent Out to College Students – A Beginner’s Guide
Another reason for buying an investment property in the Tucson real estate market 2019 is the strong job market overall. While Tucson isn’t the capital of Arizona, it still has the ability to attract new companies. Also, it is home to a number of governmental agencies such as the US Customs and Border Protection division, for example, which employs several thousand people in and around Tucson.
Moreover, the unemployment rate in Tucson has fallen to 3.8% which is better than the national average. That’s mainly because the city has announced thousands of new jobs, some are coming immediately, and others in the near future. Both the population and job market growth give Tucson real estate investors confidence in the housing market’s near- and long-term performance.
Demand Is Expected to Stay Strong
According to an article published on Tucson.com in January, the demand for new housing in the Tucson real estate market is expected to remain strong in 2019. This doesn’t come as a surprise to us considering the aforementioned population and job market growth. However, this could present some challenges for homebuilders as the supply of lots and new homes in Tucson is inadequate.
While analysts predict a stabilizing housing market nationally, local forecasters don’t believe the Tucson housing market is there yet. Entry-level homes for sale in the mid-$200,000 range are selling best, but the supply of such homes is limited relative to the demand. Homebuilders are responding to demand and, thus, are on the hunt for smaller lot sizes to stay competitive and keep home prices from soaring.
Each month, the Tucson Association of Realtors® comes out with a Tucson housing report. The numbers for January 2019 show that new listings were 2,168, which is a dramatic increase of 68.72% from 1,285 in December. Furthermore, this is just a 7.38% annual change from January 2018. So, we can conclude that Tucson real estate market inventory levels have increased slightly, but remain low.
In real estate investing, locations with high demand and low supply are generally the best places to buy rental properties. The harder it is to build new homes, the more valuable your investment property will become! To start looking for and analyzing lucrative properties for sale in your neighborhood of choice in Tucson, click here.
Home Prices Are Rising, But Still Affordable
It’s a known fact that property prices in the US housing market are seeing a rising trend in 2019. Many major cities have already seen house prices jump over the national average. Considering the increasing demand yet low supply of homes for sale in the Tucson real estate market, it’s no surprise that property prices here are going up as well.
According to data from Mashvisor’s Investment Property Calculator, the median property price in Tucson is $282,402 ($147price/square foot). While this is above the US national average, it’s still affordable for a real estate investor buying rental property. This is especially true when you compare investment property prices here to those in other cities in the Mountain Region like Denver ($454,313), Las Vegas ($376,386), Boise ($498,093), and Salt Lake City ($464,364).
Are you looking for even more affordable cities to invest in real estate? Here Are the 10 Most Affordable Real Estate Markets for 2019!
In addition, based on Mashvisor’s real estate analytics, the traditional monthly rental income from a Tucson investment property is $1,196 (lower than the national average). This gives the Tucson real estate market a price to rent ratio of 20 which suggests that renting a house is more affordable than buying one for residents. This explains why almost half of the city’s households are renter-occupied, according to the US Census Bureau and World Population Review.
What do all of these numbers mean for real estate investors? High demand for rental properties! Take advantage of this trend and use our Property Finder to find lucrative rental properties for sale in Tucson that match your criteria in a matter of minutes!
Arizona Is Landlord and Airbnb Friendly
The final reason why you might enjoy real estate investing in the Tucson housing market is the fact that it’s located in Arizona – one of the most landlord-friendly states. According to Avail, a landlord in Arizona is free to charge any rent price because there is no rent control or limit required by the state. In addition, the eviction process is seamless and landlords can evict tenants for a handful of reasons including not paying rent, failure to properly maintain the rental property in a manner that affects health and safety, and violating the lease or rental agreement.
The Tucson real estate market is not only landlord-friendly but also Airbnb-friendly! In 2017, Arizona passed a law stating that cities, towns, and counties in the state can’t place any restrictions on short-term rentals. The law also states that there are no restrictions on how many rental properties an investor can own and rent out on Airbnb or the number of days that the property can be rented out.
Related: Buying a Short-Term Rental Property? Invest in the Most Airbnb Friendly Cities
As a result, if you’re thinking of owning an Airbnb real estate investment, you’ll face no legal issues here. In fact, Airbnb is the optimal rental strategy in the Tucson housing market according to our Investment Property Calculator. Our data shows that Tucson short-term rentals have a 55% Airbnb occupancy rate and yield a monthly rental income of $2,147.
Top 5 Neighborhoods to Invest in Traditional Rentals in Tucson
Adelanto
- Median Property Price: $129,000
- Price/Square Foot: $146
- Traditional Rental Income: $1,170
- Price-to-Rent Ratio: 9
- Cash on Cash Return: 4%
Silvercroft
- Median Property Price: $181,750
- Price/Square Foot: $126
- Traditional Rental Income: $1,315
- Price-to-Rent Ratio: 12
- Cash on Cash Return: 3%
Arroyo Chico
- Median Property Price: $137,800
- Price/Square Foot: $135
- Traditional Rental Income: $899
- Price-to-Rent Ratio: 13
- Cash on Cash Return: 3%
Naylor
- Median Property Price: $160,686
- Price/Square Foot: $118
- Traditional Rental Income: $1,375
- Price-to-Rent Ratio: 10
- Cash on Cash Return: 3%
Thunderbird Heights-Wilmot Desert Estates
- Median Property Price: $187,250
- Price/Square Foot: $115
- Traditional Rental Income: $1,173
- Price-to-Rent Ratio: 13
- Cash on Cash Return: 3%
Top 5 Neighborhoods to Invest in Airbnb Rentals in Tucson
Silvercroft
- Median Property Price: $181,750
- Price/Square Foot: $126
- Airbnb Rental Income: $3,162
- Airbnb Occupancy Rate: 47%
- Cash on Cash Return: 11%
Pueblo Gardens
- Median Property Price: $149,817
- Price/Square Foot: $96
- Airbnb Rental Income: $2,306
- Airbnb Occupancy Rate: 52%
- Cash on Cash Return: 9%
Barrio Centro
- Median Property Price: $179,975
- Price/Square Foot: $118
- Airbnb Rental Income: $2,552
- Airbnb Occupancy Rate: 60%
- Cash on Cash Return: 9%
Colonia Del Valle
- Median Property Price: $217,044
- Price/Square Foot: $117
- Airbnb Rental Income: $2,796
- Airbnb Occupancy Rate: 52%
- Cash on Cash Return: 8%
Alvernon Heights
- Median Property Price: $132,500
- Price/Square Foot: $92
- Airbnb Rental Income: $1,861
- Airbnb Occupancy Rate: 71%
- Cash on Cash Return: 7%
The Bottom Line
You should not underestimate the Tucson real estate market 2019. The city enjoys strong economic indicators including population and job market growth, affordable prices, high rental demand, and will welcome you whether you choose to invest in traditional or Airbnb rentals. So, what are you waiting for?
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