Top LocationsTucson Housing Market 2020: Should You Invest? by Hamza Abdul-Samad March 11, 2020March 3, 2020 by Hamza Abdul-Samad March 11, 2020March 3, 2020The Arizona housing market is one of the nation’s best states to invest in real estate in 2020. The state is home to many profitable markets, such as the Scottsdale housing market and the Phoenix housing market. However, these two cities are not the only ones worth investing in. The Tucson housing market is actually one of Arizona’s rising rental markets. Why and where should you invest in Tucson real estate? That’s what this blog is all about!Should You Invest in the Tucson Housing Market? Why?The answer is yes, you should consider investing in Tucson real estate. Tucson income properties will make for a great real estate investment. Let’s take a look at the four most important Tucson real estate market trends to find out why.Positive Economic Indicators Point to a Healthy Real Estate MarketThe Tucson housing market will continue to benefit from the city’s economic environment in 2020.For starters, Tucson’s population has seen great growth in the last few years. In 2018, the Tucson metro’s population hit 1 million. Between 2018 and 2019, the population continued to grow at a rate of 1.59%. This trend will likely continue in 2020. Many new-comers are attracted by Tucson’s low cost of living, which is 8.4% lower than the US average, as well as its strong economy.The area’s population growth coincides with its job market growth. Over the last year, Tucson’s economy grew by 2%, trumping the national average. As a result, the metro’s median household income grew by 3.96%. The city’s economy is wide and diversified. Institutional and government foundations, health care, the University of Arizona, and the Department of Homeland Security make up Tucson’s economic backbone. The University of Arizona, in particular, is Tucson’s largest employer. UA also provides a large tenant pool of students, faculty, and staff. Student housing, therefore, has become a common niche in the Tucson real estate market.Related: How to Rent Out to College Students – A Beginner’s GuideThe Tucson Real Estate Market Is HotA good strategy is sometimes to go where other US real estate investors are going. If others are getting into Tucson real estate investing, there must be a good reason, right? With the economic and population growth, Tucson real estate investors are finding an ever-growing tenant pool. This is because the Tucson housing market is fairly pricey. With a price-to-rent ratio of 22, the average resident finds that renting a home is more affordable than buying one. As a result, over half of the city’s residents live in Tucson rental properties.Naturally, the Tucson housing market is a very hot seller’s market. Tucson’s real estate supply is lower than its demand. For context, take a look at the Tucson Association of Realtors’ January 2020 Report. Between December 2019 and January 2020, there was:a +12.1% change in closed salesa +4.6% change in median sale pricesa -29.3% change in homes for sale.There is good news regarding Tucson homes for sale in 2020, however. Tucson’s homebuilding prospects are high for the year. According to the PwC, the Tucson real estate market ranks 18th in this regard. In addition, the Tucson Association of Realtors projects a 10% increase in new home construction in 2020. So although it’s a hot seller’s market, you will be able to find more options throughout the year to take advantage of the profitable rental properties. And Mashvisor’s data shows how profitable long-term rental properties are in the city:Monthly Traditional Rental Income: $1,758 Traditional Cap Rate: 1.7%Related: Will the 2020 US Housing Market Be a Seller’s Market or a Buyer’s Market?Tucson Housing Prices Will IncreaseOur Tucson housing market forecast would not be complete without discussing housing prices. Currently, the median price of a Tucson investment property is $458,300, according to Mashvisor.Historically, investing in Tucson real estate did not yield high appreciation. In the last 10 years, the Tucson housing market was in the top 50% nationwide for real estate appreciation. However, this trend has changed as of late. With the increased demand for Tucson investment properties, Tucson housing prices started to increase. In 2019, house prices grew by a whopping 7.3%. For 2020, a rental property in Tucson will likely appreciate by 4.9%.Buying property in Tucson could be expensive, but it doesn’t have to be. By using a heatmap analysis, you can quickly identify the cheapest neighborhoods with profitable Tucson investment properties for sale. To learn more about Mashvisor’s heatmap analysis tool, read: Real Estate Heatmap: A Revolutionary Tool for Neighborhood Analysis.Arizona Is Landlord and Airbnb FriendlyBuying a Tucson real estate investment will be excellent in 2020 for two more reasons. Firstly, the Tucson housing market is located in Arizona, a well-known landlord-friendly state. As per the state rental laws, Tucson investors are free to charge any rent price, since there are no required rent limits. The eviction process is generally more lenient for investors in Arizona as well.Related: Invest in Real Estate in the 5 Most Landlord-Friendly StatesSecondly, the Arizona State Legislature bars its cities from restricting short-term rentals. As a result, Airbnb cannot be legally forbidden in the Tucson housing market. Fortunately, Airbnb has been fully legalized in Tucson since 2016. Tucson Airbnb laws are very straight forward. There are no restrictions on using a non-owner occupied property as an STR. Airbnb Tucson hosts must also obtain a business license and tax of 2.6%. In addition, Tucson Airbnb regulations dictate a 5.5% Arizona Transaction Privilege Tax. Even with these additional costs, an Airbnb rental property in Tucson is quite profitable, according to Mashvisor’s data:Average Airbnb Daily Rate: $223 Monthly Airbnb Rental Income: $3,115 Airbnb Cap Rate: 3.7%Airbnb Occupancy Rate: 52.6% Find a Profitable Airbnb Investment PropertyThe 5 Best Neighborhoods in Tucson for the Traditional Rental StrategyRosemont WestMedian Property Price: $195,633Price per Square Foot: $144Price-to-Rent Ratio: 6Traditional Rental Income: $2,006Traditional Cap Rate / Cash on Cash Return: 5.8%AvondaleMedian Property Price: $191,975Price per Square Foot: $140Price-to-Rent Ratio: 14Traditional Rental Income: $1,152Traditional Cap Rate / Cash on Cash Return: 2.3%Arroyo ChicoMedian Property Price: $138,500Price per Square Foot: $146Price-to-Rent Ratio: 12Traditional Rental Income: $930Traditional Cap Rate / Cash on Cash Return: 1.9%Richland Heights WestMedian Property Price: $135,000Price per Square Foot: $95Price-to-Rent Ratio: 13Traditional Rental Income: $888Traditional Cap Rate / Cash on Cash Return: 1.8%Sierra EstatesMedian Property Price: $177,000Price per Square Foot: $134Price-to-Rent Ratio: 17Traditional Rental Income: $877Traditional Cap Rate / Cash on Cash Return: 1.2%The 5 Best Neighborhoods in Tucson for the Airbnb Rental StrategyDunbar SpringMedian Property Price: $383,000Price per Square Foot: $207Price-to-Rent Ratio: 27Monthly Airbnb Rental Income: $2,777Airbnb Cap Rate / Cash on Cash Return: 9.8%Airbnb Occupancy Rate: 61.6%Richland Heights WestMedian Property Price: $135,000Price per Square Foot: $95Price-to-Rent Ratio: 13Monthly Airbnb Rental Income: $2,304Airbnb Cap Rate / Cash on Cash Return: 9.0%Airbnb Occupancy Rate: 57.6%Panorama EstatesMedian Property Price: $122,300Price per Square Foot: $121Price-to-Rent Ratio: 20.86Monthly Airbnb Rental Income: $1,764Airbnb Cap Rate / Cash on Cash Return: 9.0%Airbnb Occupancy Rate: 59.9%Barrio AnitaMedian Property Price: $172,000Price per Square Foot: $131Price-to-Rent Ratio: 16.14Monthly Airbnb Rental Income: $2,777Airbnb Cap Rate / Cash on Cash Return: 8.8%Airbnb Occupancy Rate: 62.2%Julia KeenMedian Property Price: $147,592Price per Square Foot: $141Price-to-Rent Ratio: 17Monthly Airbnb Rental Income: $2,616Airbnb Cap Rate / Cash on Cash Return: 8.7%Airbnb Occupancy Rate: 70.4%All in all, the Tucson housing market is one of Arizona’s top markets in 2020. Its positive economic indicators, growing demand, increasing prices, and Airbnb and landlord friendliness make it a must-consider for Arizona real estate investors.To start searching for Tucson short-term rental properties and long-term rental properties, CLICK HERE to start your FREE trial with Mashvisor! Start Your Investment Property Search! START FREE TRIAL AirbnbAirbnb RegulationsArizonaNeighborhoodTraditionalTucson AZ 0FacebookTwitterGoogle +PinterestLinkedin Hamza Abdul-SamadHamza is a long-time writer at Mashvisor. With a focus on real estate investing tips, concepts, and top investing locations, he aims to help all aspiring investors who come across his blogs to hit the bank with their investment property. Previous Post How to Find Cash Flow Investment Properties Next Post How to Sell a House Fast in a Slow Market: 10 Tips Related Posts How About Buying an Investment Property in the Dallas Real Estate Market in 2018? Best International Cities For Airbnb Occupancy Rate What You Need to Know About Charlotte Real Estate Boston Real Estate Market 2019: 5 Best Neighborhoods Now Is the Time to Invest in Airbnb Columbus, Ohio 7 Best Airbnb Locations with No Offseason for Real Estate Investing 10 Best Places to Buy Investment Property in the Summer of 2019 What Are the Hottest Real Estate Markets 2018 in the US? These Buyer’s Markets are the Best Markets to Invest in Right Now Toledo, OH: One of the Best Places to Buy Rental Property in 2021 20 Most Profitable Airbnb Locations in 2020: Cash on Cash Return Is Early 2018 the Right Time to Buy House in Florida to Invest in Real Estate?