Tucson Housing Market Forecast 2025-2026: Will Prices Fall?

Thinking about buying or selling a home in Tucson? You're probably wondering what's happening in the current Tucson housing market. Well, the market is somewhat competitive. In January 2025, the median sale price of a home in Tucson was $328K, up 3.2% compared to last year. Homes are selling in around 70 days. Let's dive into a more detailed look at the latest trends.

Current Tucson Housing Market Trends: A 2025 Analysis

Home Sales

Let's start with the basics: how many homes are actually selling?

• According to Redfin, in January 2025, there were 348 homes sold in Tucson.
• This is a slight decrease of 0.85% compared to the 351 homes sold in January of the previous year.

While the number of sales has dipped slightly, it’s essential to remember that real estate is seasonal. January is often a slower month. So, while the year-over-year number is down a bit, it doesn't necessarily indicate a major downward trend. We should wait to see how the spring market unfolds.

Home Prices

Now, let's talk about the bottom line: home prices.

• The median sale price in Tucson in January 2025 was $327,700.
• That's a 3.2% increase compared to January of the previous year.
• The median sale price per square foot is $213, a 0.5% increase since last year.

This suggests that even though the number of homes sold is slightly down, prices are still trending upward, albeit at a more moderate pace than we've seen in recent years.

Are Home Prices Dropping?

This is a question on everyone's mind, especially with interest rates being what they are. Based on the latest data, home prices in Tucson are not dropping. They are still increasing year-over-year, but the growth is slowing down compared to the rapid appreciation we saw during the peak of the market. While there is no imminent crash, it could be a sign of price stabilization. This is healthier for the long-term stability of the market.

Comparison with Current National Median Price

It's always good to put local numbers into a broader context. Let's compare Tucson's median home price to the national median.

• National Median Price (January 2025): $396,900
• Year-over-Year Change: +4.8%
• Tucson's median sale price is 23% lower than the national average.

This means that Tucson remains a relatively affordable option compared to many other areas of the country. This affordability is one of the things that continues to attract people to Tucson.

Is It a Buyer's or Seller's Housing Market?

Determining whether it's a buyer's or seller's market can be tricky, as market conditions shift over time.

• Homes in Tucson receive around 1 offer on average.
• Homes sell in about 70 days, compared to 62 days last year.
• The average home sells for about 2% below list price.

Based on these factors, I would say that Tucson is leaning towards a neutral market, or potentially a slightly competitive market. This means that buyers have a bit more negotiating power than they did a year or two ago, but desirable properties in good locations are still likely to sell relatively quickly.

Market Trends

Here are some other notable market trends in Tucson:

• Sale-to-List Price Ratio: 96.9%, down 1.6 percentage points year-over-year. This means that homes are selling for slightly less than their list price, suggesting a bit more room for negotiation.
• Homes Sold Above List Price: 12.9%, down 11.6 percentage points year-over-year. This is a significant drop, indicating that bidding wars are becoming less common.
• Homes with Price Drops: 25.6%, down 0.4 percentage points year-over-year. This suggests that sellers are still adjusting to the changing market dynamics.

Impact of High Mortgage Rates

Mortgage rates have a significant impact on the housing market, affecting affordability and buyer demand.

• As of early March 2025, the average 30-year fixed mortgage rate is around 6.63% (Freddie Mac).
• Most forecasts predict rates will remain at or slightly above this level.

Here’s a table summarizing the key housing market data:

Metric	January 2025	Year-over-Year Change
Median Sale Price	$327,700	+3.2%
Number of Homes Sold	348	-0.85%
Median Days on Market	70	+8 days
Sale-to-List Price Ratio	96.9%	-1.6 pt
Homes Sold Above List Price	12.9%	-11.6 pt

The elevated mortgage rates have certainly cooled the market compared to the frenzied pace of 2021 and 2022. This is because borrowing is more expensive, reducing the number of buyers who can afford to enter the market. It has led to longer times on market and increased inventory levels, giving buyers more options and negotiating power.

Tucson Housing Market Forecast: What's Ahead for Home Prices?

You're probably wondering what the future holds. So, let's dive into the Tucson housing market forecast. Based on the latest data, expect a modest increase in home values over the next year. While short-term dips are possible, overall, things look pretty stable with a slight upward trend.

Okay, I know what you're thinking: “Just give me the numbers!” I get it. Here's what the crystal ball (aka Zillow's forecast from January 2025) says:

• February 2025 Projection: A slight dip of 0.2%.
• April 2025 Projection: Another small decrease of 0.2%.
• One-Year Forecast (January 2025 to January 2026): A predicted increase of 1.1%.

So, while we might see a couple of months with slightly lower prices, the overall trend points to a positive, albeit modest, growth in the Tucson real estate market.

Tucson vs. The Rest of Arizona: How Does it Stack Up?

It's always helpful to see how Tucson's housing market compares to other areas in Arizona. Here's a quick look at the projected one-year growth for some other cities:

Region	1-Year Forecast (Jan 2025 – Jan 2026)
Phoenix	1.4%
Lake Havasu City	0.8%
Yuma	3.3%
Flagstaff	3.9%
Sierra Vista	0.3%
Tucson	1.1%

As you can see, Tucson's forecast is pretty middle-of-the-road compared to other Arizona cities. Flagstaff and Yuma are expected to see stronger growth, while Sierra Vista's market is predicted to be more sluggish. Phoenix is also expected to have slightly higher growth.

Will Home Prices Drop in Tucson? Will it Crash?

This is the million-dollar question, isn't it? Nobody has a foolproof crystal ball, but based on the current data and my own observations, I don't foresee a major crash in the Tucson housing market. The small dips predicted for February and April of 2025 aren't alarming, and the overall one-year forecast is positive.

Several factors are at play here:

• Demand: Tucson is still a desirable place to live, attracting people with its weather, culture, and relatively affordable cost of living.
• Inventory: While inventory has improved from the lows of recent years, it is not yet at pre-pandemic levels.

My Opinion: I believe these factors should keep prices relatively stable, with moderate appreciation in the coming year.

Looking Further Ahead: A Possible Forecast for 2026

Trying to predict the Tucson housing market in 2026 is a bit like guessing the weather a year from now. However, we can make some educated guesses. If the economy remains relatively stable and interest rates don't skyrocket, I think we'll see continued, but moderate, growth in Tucson's home values. It's unlikely we'll see the crazy price increases of 2021-2022 again anytime soon. My personal feeling is that growth will be in the range of 2-4% for the year. Of course, this is just a prediction and should not be taken as official financial advice.

In conclusion: The Tucson housing market forecast is for continued stability and moderate growth. While there may be short-term dips, the overall trend appears positive. As always, it's essential to do your own research and consult with a qualified real estate professional before making any decisions. Good luck!

Why Consider Tucson for Real Estate Investment?

The allure of the Wild West, a vibrant cultural scene, and the majestic beauty of the Sonoran Desert – Tucson, Arizona, offers more than meets the eye. But what about Tucson real estate investment? Is it a wise financial move? With its affordable housing market, growing job sector, and high quality of life, Tucson has become a hot spot for real estate investors seeking lucrative opportunities.

Tucson presents a compelling case for real estate investors, thanks to its unique blend of affordability, growth potential, and desirable lifestyle. Let's break down the key factors driving investor interest:

1. Affordability Compared to Other Major Cities

One of the biggest draws for real estate investors in Tucson is its affordability. Compared to other major cities in Arizona and across the nation, Tucson boasts a significantly lower cost of living, especially when it comes to housing. Affordability in housing costs allows investors to enter the market at a lower price point, potentially maximizing their return on investment.

2. A Growing Job Market Fueling Population Growth

Tucson's economy has been steadily diversifying and expanding, attracting new residents and driving demand for housing. Key industries contributing to this growth include:

• Aerospace and Defense: Home to Davis-Monthan Air Force Base and Raytheon Missiles & Defense, Tucson boasts a strong presence in the aerospace and defense sector.
• Healthcare: Banner University Medical Center and Tucson Medical Center, two major healthcare providers, are major employers in the region.
• Education: The University of Arizona, a renowned research institution, is a significant economic driver, employing thousands and attracting a large student population.
• Technology: Tucson is witnessing a surge in tech startups and established companies, particularly in the fields of optics, biotechnology, and renewable energy.

This robust job market has resulted in consistent population growth, further fueling the demand for housing and making Tucson real estate a sound investment.

3. High Quality of Life Attracting Residents

Beyond affordability and job opportunities, Tucson offers an enviable quality of life that attracts residents from all walks of life.

• Outdoor Recreation: Surrounded by breathtaking mountain ranges, Tucson is an outdoor enthusiast's paradise, offering ample opportunities for hiking, biking, rock climbing, and more.
• Rich Culture and History: From historic sites like Mission San Xavier del Bac to vibrant art galleries and museums, Tucson boasts a rich cultural heritage.
• Foodie Paradise: Tucson holds the distinction of being a UNESCO City of Gastronomy, renowned for its diverse culinary scene and authentic Southwestern flavors.
• Sunny Weather: With over 300 days of sunshine per year, Tucson offers residents an abundance of opportunities to enjoy the outdoors.

This combination of factors contributes to Tucson's desirability as a place to live, making it an attractive market for real estate investors seeking long-term growth.

Best Neighborhoods for Real Estate Investment in Tucson

Tucson offers a diverse range of neighborhoods, each with its own unique character and investment potential. Here are a few noteworthy areas for real estate investors to consider:

1. Downtown Tucson: A Hub for Young Professionals and Urban Dwellers

• Overview: Downtown Tucson has undergone a significant revitalization in recent years, transforming into a vibrant hub for young professionals, students, and urban dwellers.
• Investment Potential: The area offers a mix of historic properties, renovated lofts, and new condo developments, attracting both renters and buyers seeking a walkable lifestyle close to amenities.
• Key Features: Lively nightlife, trendy restaurants, cultural attractions, proximity to the University of Arizona.

2. Sam Hughes: A Charming Historic Neighborhood with Character

• Overview: Nestled east of the University of Arizona, Sam Hughes exudes charm and character with its tree-lined streets, historic homes, and a strong sense of community.
• Investment Potential: This highly desirable neighborhood attracts families and professionals seeking a peaceful and established community close to the university and downtown.
• Key Features: Historic architecture, mature landscaping, family-friendly atmosphere, close proximity to the University of Arizona.

3. Armory Park: A Historic Gem with Growing Appeal

• Overview: Located just south of downtown, Armory Park is a historic neighborhood that has experienced significant revitalization in recent years, attracting a mix of young professionals, families, and artists.
• Investment Potential: The area offers a mix of restored historic homes and new construction, presenting opportunities for investors seeking character and value appreciation.
• Key Features: Historic architecture, proximity to downtown, walkable streets, growing arts and culture scene.

4. Catalina Foothills: Upscale Living with Scenic Views

• Overview: Nestled at the base of the Santa Catalina Mountains, Catalina Foothills offers upscale living with breathtaking mountain views and a tranquil atmosphere.
• Investment Potential: This affluent neighborhood attracts high-end buyers seeking luxury homes with privacy and scenic beauty.
• Key Features: Luxury homes, breathtaking views, hiking trails, upscale shopping and dining, highly rated schools.

5. Civano: A Sustainable and Eco-Friendly Community**

• Overview: Civano is a master-planned community on the southeast side of Tucson, known for its focus on sustainability, energy efficiency, and community living.
• Investment Potential: This unique neighborhood attracts environmentally conscious buyers seeking a sustainable lifestyle and a strong sense of community.
• Key Features: Eco-friendly homes, community gardens, walking trails, solar power, close-knit community.

Is Tucson Right for You?

Tucson real estate investment presents a compelling opportunity for investors seeking affordability, growth potential, and a high quality of life. With its thriving job market, steady appreciation, and diverse range of neighborhoods, Tucson offers something for every investor.

However, it's crucial to conduct thorough research, weigh the potential risks and rewards, and consult with experienced professionals before making any decisions. By approaching Tucson real estate with careful planning and a long-term perspective, you can position yourself for success in this vibrant and growing market.