Top 5 Cities To Invest In Arizona

With breathtaking landscapes and bustling cities, Arizona is gearing up for an exciting journey in the housing market as we emerge from Q4 of 2023. What’s on the horizon? Well, the crystal ball says that 2024 is likely to see a gradual rise in the housing market, all while maintaining its steady course for the remainder of 2023, even in the face of those ever-shifting market winds. So, if you’ve been pondering your next real estate investment moves, there are plenty of potential opportunities in the Grand Canyon State!

In the latest report released by Zillow, Arizona’s housing scene has been on a bit of a rollercoaster ride. Prices took a dip, showing a 6.8% decrease in the past year, up to Q2, 2023. The market is experiencing a correction, as the sudden and unsustainable growth was bound to correct at some point.

Fear not! It doesn’t mean we’re headed for gloomy days in the Arizona real estate market- fluctuations are normal, and they can be traced back to a bunch of factors like economy, inventory, and mortgage rates.

If you’re eyeing the Arizona housing market, this price drop might just be the ticket you’ve been waiting for. We’ve done the hard part for you by breaking down our pick for the top 5 cities to invest in Arizona.  Think about it—a chance to swoop into the market without breaking the bank.

Whether you are a novice in the realm of homebuying or a seasoned investor seeking profitable opportunities, staying in the know about these fluctuations in the market is the key to making informed decisions in this dynamic world of real estate.

Phoenix

Arizona’s most populous city presents a diverse range of real estate investment opportunities. Among these, Downtown Phoenix stands out as a dynamic urban center combining residential, commercial, and cultural elements that make it a hotspot for investors. From the captivating Phoenix Art Museum to the artistic area of Roosevelt Row and the excitement of Chase Field, Phoenix has something for everyone.

The current metro area population of Phoenix stands at 4.7 million, a 1.4% increase from 2022. It’s the perfect blend of attractions, fashion-forward eateries, art galleries, and outdoor spaces that make Phoenix a magnet for both young professionals and families alike. Although rents have fallen 1.6% from Q1 to Q3 2023, there’s still hope for the vibrant urban area.

The housing market in Q2 2023 experienced notable fluctuation. Sales volume in July took a bit of a hit, down 20.4% from the previous month and 3.1% year-over-year. And if that’s not enough, inventory also saw a 1.8% month-over-month dip and a shocking 31.7% year-over-year nosedive. This shrinking pool of available properties is a game-changer, impacting buyer choices and market dynamics.

But hang tight because it’s not all bad news. Phoenix’s typical selling price managed a slight uptick of +1.4% compared to the previous year. However, the median selling price took a little dip, down by -4.1% year-over-year. Looking ahead to August, the projections indicate that average selling prices will keep on climbing, while median selling prices are likely to hold steady without much change.

If you’re wondering where to invest your money in the Arizona real estate scene, rest assured that Phoenix remains a solid and strategic choice. Despite the recent rollercoaster ride in the housing market, the city’s diverse opportunities and recreational attractions continue to lure young professionals and families in.

Phoenix offers an exciting landscape for real estate investors, especially those interested in flipping or building a house. Despite the fluctuations in market conditions, the enduring charm of Phoenix, coupled with its potential for sustained long-term growth, makes it an appealing choice for investors aiming for stability and profitability.

Tucson

The city’s breathtaking scenery and outdoor recreation makes Tucson second on our list of top cities for investing in Arizona. Tucson has had its ups and downs this year, as Q2 2023 has witnessed some notable shifts. With its vibrant desert landscape and captivating culture, Tucson could become a hidden gem for real estate investors.

Tucson real estate market is set to blossom. New listings in Tucson are expected to sprout 7.6% by Q2 2024, year-over-year. This forecast translates into a promising environment of steady home value appreciation over the next 12 months. Now, that’s a bright outlook for anyone looking to dip their toes into the city’s real estate scene.

As of August 2023, the median home sales price in Tucson stood tall at $385,000, which is a 2.9% increase compared to the same time last year. However, it did dip $10,000 compared to the previous month.

August also saw both Single Family and Townhouse/Condo listings take a bit of a siesta. Single Family new listings saw a significant dip of 35.1%, while Townhouse/Condo new listings snoozed even harder, plummeting by a considerable 44.5%.

These reduced housing prices could be a great opportunity for investors looking to purchase and rehabilitate a property because they can get deals at a lower cost and flip for a big profit! Even if the area you’re considering is in a market downturn, an area like Tucson is no stranger to seeing an influx of potential buyers and sellers.

Despite the city’s market fluctuations, Tucson remains a compelling choice for real estate investors seeking new projects amidst the 2024 growth forecast. The promising signs of steady home value appreciation paired with reduced housing prices also present favorable opportunities for investors in the real estate landscape.

Scottsdale  

If you’re dreaming of sipping margaritas by your Arizona poolside, all while your real estate investment grows, Scottsdale should be your desert oasis of choice. Let’s delve into why Scottsdale stands out as a prime destination for real estate investments.

The median home sold price in Scottsdale for Q2 2023 was $799,162, a 3.6% increase from the year before! Scottsdale’s real estate market isn’t just healthy; it’s rolling in the green. Higher listing prices means a higher return on investment for your next project in the city. Whether it’s a fix and flip or new construction, rest assured your property in Scottsdale has the potential for a big return on investment.

The city offers investors a diverse range of options, with 2,247 homes available for sale at the end of Q2 2023. This represents a notable 4.3% increase in inventory compared to the previous month, providing investors with choices to suit their preferences and investment strategies. Additionally, buyers will be more likely to make a move in a town that is available in inventory. With more available housing you’ll be able to have flexibility throughout your project.

The end of Q2 2023 witnessed a surge in real estate transactions in Scottsdale, with a total of 537 homes either sold or pending. This marks a notable 15.7% month-over-month increase and suggests a strong and active real estate market perfect for profitable real estate investments.

The long-term profit potential is +2.26% in one year in Scottsdale and prices are not forecasted to drop. This could be a prime property investment option for those looking for a good flipping profit. With long-term increase expected, Scottsdale’s real estate market positions itself as an attractive destination for real estate investors.

Tempe

While there has been a slight decrease in home prices and a shift in market dynamics in Tempe, the overall outlook remains positive, with strong appreciation rates and a stable environment for investment. If you’re considering the top cities to invest in Arizona, Tempe should be on your radar.

Sea Life Arizona Aquarium, Tempe Marketplace, and Mill Avenue district are just a few of the reasons people love this vibrant city, in addition to how affordable it is to live within the Phoenix metro.

In August 2023, Tempe’s residential property market experienced a 4.3% decline in home prices compared to the previous year. This adjustment has positioned the median home price at a favorable $445,000, presenting an attractive investment opportunity for those looking to diversify their real estate portfolio and take the risk of a higher potential return.

Another intriguing trend to consider is the drop in the number of homes sold in Q2 2023, with 98 homes sold, down from 138 in the same month the previous year. A lower number of homes sold may indicate an increased demand for rental properties, as people may be less inclined to purchase homes in a cooling market. This can benefit investors who are interested in income-generating properties.

The number of new listings for homes in Q2 2023 has taken a bit of a dip, down by approximately 16.8% compared to the previous year. Investors can use the reduced supply of new listings to strategically target specific neighborhoods or property types. By concentrating their investments in areas with limited supply, they can potentially benefit from higher appreciation rates and increased demand.

But wait, there’s more good news for potential investors. The average sold price for a single-family home in Tempe in the end of Q2 2023 is $668,579, marking a 13.1% increase from the previous year. Additionally, the median sold price for August 2023 was $570,000, indicating a 9.6% increase from Q2 2022.

With expectation of future gains, Tempe is a great opportunity for potential capital appreciation and higher rental yields.

Mesa

Mesa, Arizona, is undoubtedly one of the top cities to consider when it comes to real estate investment in the Grand Canyon State. Mesa’s proximity to the thriving Greater Phoenix area offers residents access to the amenities of a major city while enjoying Mesa’s distinct, family-friendly atmosphere. From the Arizona Museum of Natural History to the regional parks, the city boasts a vibrant real estate market with several key trends that make it a prime destination for both seasoned and novice investors.

First and foremost, the median home price in Mesa stood at a reasonable $430,674 in Q2 2023, marking a 3.2% decrease from the previous year. This low entry cost can be a smart opportunity for investors looking to enter the market without breaking the bank.

Although the number of homes sold in Q2 2023 decreased to 426 from 520 in the previous year, it’s important to note that Mesa’s real estate market remains robust. 30% of homebuyers in Mesa during Q2 2023 expressed a desire to move out of the city, while the majority, 70%, were looking to stay within the metropolitan area. This indicates a strong local demand for housing, which is a positive sign for investors who can target properties in desired neighborhoods in Mesa.

Furthermore, Mesa is currently classified as a sellers housing market. This designation signifies that home prices tend to be higher, and properties tend to sell faster, making it a seller’s paradise. With 1,504 homes available for sale in Q2 2023, marking a 3.4% increase from July 2023, there’s still a sizable inventory for buyers to choose from. This way you can find properties that align with your investment goals whether its rental income or capital gain.

Mesa, Arizona, offers a promising landscape for real estate investors in 2023. With reasonable median home prices, a healthy demand for housing, and an influx of buyers from other major cities, Mesa should be high on the list for anyone looking to invest in the Arizona real estate market. Don’t miss out on the opportunities this thriving city has to offer!

In Review

The Arizona real estate market is no stranger to these fluctuations. It’s a dance orchestrated by a symphony of economic forces, inventory levels, and the variation of eager buyers. What it means for you, the aspiring real estate connoisseur, is an invitation to seize the moment.

As we enter 2024 and beyond, remember that Arizona’s housing market is a journey filled with promise, potential, and prosperity. Keep your finger on the pulse, stay nimble, and let your investment journey in the Grand Canyon State be one filled with excitement and success.