Arizona’s real estate market is entering the summer season with noticeable shifts in home prices, housing inventory, and the rhythm of sales. For potential investors and those monitoring housing trends, the latest news from the past week highlights both emerging opportunities and the persistent headwinds of affordability and rising interest rates.
Market Overview
Recent reporting from Phoenix, Tucson, and several fast-growing suburban markets indicates a measured cooling from previous years’ red-hot conditions. According to June 2024 data released by the Arizona Regional Multiple Listing Service (ARMLS), the median home price across Maricopa County—a key barometer for the state—stood at roughly $450,000. This reflects a modest year-over-year increase of just under 2 percent. The steady but subdued price growth stands in contrast to the explosive double-digit gains seen throughout the pandemic years.
The slight uptick in prices coincides with an increase in available inventory. New listings are up nearly 15 percent year-over-year in both metropolitan Phoenix and Tucson. The active inventory, or total homes for sale at any one time, has surpassed pre-pandemic levels for the first time since early 2020. Analysts from the Cromford Report, which tracks the Valley’s market, note that the “fear of missing out” has subsided among buyers. Many homeowners previously reluctant to sell are now testing the market, encouraged by the plateau in prices and a growing sense that interest rates may linger higher for longer.
This shift in housing supply has provided buyers with more negotiation power. Realtors in Scottsdale, Chandler, and Gilbert report that multiple-offer situations are no longer the norm. Sellers are now more likely to offer concessions, such as closing cost assistance or rate buy-downs. According to ARMLS data, nearly one third of May contracts included some type of seller concession—a figure almost double last year’s rate.
Home Sales Slow Amid Affordability Pressure
While home prices have found a new equilibrium, the volume of sales continues to lag. Closed home sales across Arizona fell approximately 7 percent in May compared to the prior year, according to REDFIN and ARMLS data. Higher mortgage rates appear to be the primary drag. The average 30-year fixed mortgage rate remains above 7 percent—a difficult reality for both traditional buyers and investors hoping to finance acquisitions.
Even so, there are signs of life among first-time buyers drawn by increased choice and the prospect of future price appreciation. Some investors are watching sales activity among builders, who have responded to sluggish demand with reduced pricing and significant incentive packages. Some new home communities west of Phoenix and in Pinal County are offering upfront buyer credits or discounted upgrades worth $20,000 to $30,000. This seems to be keeping sales volume buoyant in popular outer-ring suburbs, offsetting slower activity in more expensive areas.
Rental Market Resilience
One bright spot for real estate investors is the Arizona rental market, which remains robust. Despite an uptick in apartment construction, the demand for single-family rentals continues to grow, especially in Phoenix and Tucson. Rents have stabilized after years of steep climbs, but have not posted any significant declines. Data from Zillow shows the median rent for a single-family home in metro Phoenix was nearly $2,200 in May, up about 4 percent from one year ago.
The persistent demand for rental housing has supported investor interest, particularly among those seeking reliable cash flow. Even with higher financing costs, investors purchasing with cash or large down payments are finding cap rates in the 5 to 6 percent range, according to Marcus & Millichap. Anecdotes from local property managers confirm that well-maintained rentals priced near the market median often lease within two weeks, which helps contain vacancy risk.
Fluctuations in investor activity
The overall proportion of homes purchased by investors has dipped compared to the frenzied pace during 2021 and 2022, when investors accounted for nearly one in every four home purchases in metro Phoenix. Data from CoreLogic puts recent investor activity closer to 16 percent of all transactions—still higher than the national average, but a significant retreat from record highs. Some large institutional buy-to-rent companies have slowed purchasing due to higher capital costs, but individual investors and small partnerships remain active, particularly in the $350,000–$500,000 price band.
Notably, iBuyers like Opendoor and Offerpad have reduced their activity in the Phoenix area. Their purchases have fallen by as much as 80 percent from peak levels, contributing to softer price pressure throughout the region. This has created more space for traditional investors who may be more patient and less sensitive to short-term price swings.
Regional Highlights
Phoenix remains the epicenter of Arizona’s real estate scene, but other regions are emerging as key markets for investors. Tucson is seeing an influx of buyers priced out of Phoenix, while Flagstaff and Prescott continue to attract both vacation home owners and retirees. These areas have not seen the same volume of price cuts seen in the Valley, but they offer long-term appreciation potential due to limited new construction and continued population growth.
In the fast-growing suburbs south and east of Phoenix—such as Queen Creek and Maricopa—new home builders have ramped up production. While this increases inventory in the short term, long-term absorption is likely as remote work allows more families to consider outlying markets in search of affordability and quality schools.
Implications for Real Estate Investors
The latest news indicates that Arizona is transitioning to a more balanced real estate market, shaped by the interplay of elevated mortgage rates and resilient demand. For investors, this environment demands a nuanced approach. The frenzied speculation and aggressive bidding wars that defined 2021 have given way to a climate that rewards careful property selection, solid due diligence, and realistic rent growth assumptions.
Cash buyers and long-term investors are well positioned to capitalize on increased supply and improved negotiation leverage. Given the ongoing shortage of affordable rental units, the buy-and-hold strategy—particularly in single-family and small multifamily segments—remains attractive. More cautious investors may wait to see if mortgage rates ease over the next six to twelve months, but the state’s strong population gains and job growth argue for continued demand and appreciation over time.
Affordable pockets and up-and-coming neighborhoods now represent prime opportunities. Areas adjacent to major employment centers and those benefiting from infrastructure investments—like Tempe, Mesa, and Goodyear—stand out as places to watch. Additionally, seasoned investors are focusing on properties that may benefit from light renovations or energy efficiency upgrades, both of which remain popular with renters and buyers alike.
Cautious Optimism for the Second Half of 2024
Arizona’s real estate market will likely remain in flux through the end of 2024. The coming months will be shaped by the Federal Reserve’s interest rate decisions, the possibility of economic slowdown, and ongoing shifts in migration patterns from other Western states. So far, recent news points toward moderation, not a downturn.
Investors with a long time horizon and conservative projections will find Arizona’s market still offers opportunities, particularly for those willing to buy and hold in strong fundamentals-driven locations. While the easy profits of recent years are gone, the state’s demographic tailwinds and persistent rental demand should continue to reward thoughtful investing.
