7 Housing Market Predictions for Arizona Over the Next 5 Years, According to Real Estate Agents
There are plenty of reasons that Arizona is considered a hot state. No, it’s not just the weather that breaks records — it’s the housing market as well. Real estate in Arizona is having a boom for a variety of reasons and it might continue through 2029… or fizzle out by that time as well.
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GOBankingRates asked a few real estate agents what they thought was going to happen in The Grand Canyon State. Here are their predictions for the Arizona housing market over the next five years.
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Population Growth
“Arizona, especially the Phoenix area, is expected to keep attracting new residents thanks to its warm climate, affordable living costs, and job opportunities,” said Jordan Woolf, CEO of the real estate investment company We Buy Houses In Bama.
According to Woolf, “Retirees and remote workers may find Arizona increasingly appealing, driving demand for housing in both cities and suburbs.”
With the population growing, Arizona’s housing market, in the words of Jonathan Faccone, founder of Halo Homebuyers, “is looking bright.”
Jolean Olson, a real estate expert with Olson Home Buyers, echoed that, saying, “Arizona, particularly Phoenix, has been one of the fastest-growing regions in the U.S. The state’s warm climate, affordable living and business-friendly environment appeal to retirees, remote workers, and tech companies.”
Faccone added, “This influx of new residents, combined with a limited housing supply, is driving up home prices.”
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Economic Development
Woolf said Arizona’s economy spans technology, healthcare and tourism and “continued economic development will likely support a strong real estate market.”
Faccone agreed, calling Arizona “one of the top states for economic growth and business-friendly policies, attracting more people to move here.”
Olson added, “Arizona’s economy is diversifying beyond its traditional reliance on construction and real estate. The state is becoming a hotspot for tech companies and startups, contributing to a thriving job market and increased demand for both residential and commercial properties.”
Woolf suggested that property values will increase via “investments in infrastructure and transportation, like light rail expansions and freeway improvements.”
Sustainable Development
Arizona is making progress in sustainable building practices and renewable energy, Woolf said.
“Homes and commercial properties with green features may become more desirable,” Woolf said. “Water conservation efforts and technologies will be crucial for long-term growth, leading to innovative developments.”
Olson added, “Arizona is also investing in infrastructure, particularly in expanding its transportation networks. The development of light rail systems and improvements in roadways will facilitate easier commutes and encourage residential growth in suburban and urban areas.”
Faccone cited Walletinvestor’s research, which predicted that Arizona home values are expected to decrease in the next 12 months.
“Median home values rose by 50.5% to $221,665 between 2023 to 2024,” Faccone said. “Arizona City real estate market research predicts sales prices will increase by 38.5% over the next 10 years.”
Water Scarcity
Arizona faces significant water scarcity issues, which could impact long-term growth and property values, according to Woolf and Olson.
“Water restrictions and conservation measures may become stricter,” Woolf said.
“Water scarcity is a significant concern in Arizona, given its desert climate,” Olson added. “The state relies heavily on water from the Colorado River, and ongoing drought conditions could limit future development and pose sustainability challenges for the real estate market.”
Woolf agreed, adding, “Dependence on the Colorado River, which is experiencing reduced flow, poses a significant risk to real estate development and agriculture.”
Climate Challenges
One challenge that could deter potential homebuyers is the growing prevalence of wildfires.
“Arizona faces extreme heat and wildfire risks, particularly in rural and forested areas,” Olson said. “These climate risks can affect property values, increase insurance premiums, and limit the desirability of certain locations.”
Woolf pointed out that air quality issues, worsened by dust storms and wildfires, could impact health and the desirability of certain areas.
Economic Inequality
Arizona faces rising home prices, especially in Phoenix, according to Olson.
“The affordability crisis may deter potential buyers and exacerbate rental demand, leading to higher rental rates and potential market instability,” Olson said.
Woolf added, “Rapid growth could lead to economic disparities, with rising home prices and living costs potentially displacing lower-income residents.
“There may also be increased pressure on public services and infrastructure, requiring substantial investments to keep up with growth.”
Regulatory Changes
Changes in property tax laws or zoning regulations could impact the real estate market, according to Olson.
“Arizona’s regulatory environment is generally favorable, but potential changes in land use regulations or environmental policies could influence development patterns and market trends,” Olson explained.
Final Thoughts
“For professional homebuyers, these insights suggest opportunities for investment in growing urban and suburban areas, particularly those focused on sustainable development and technological innovation,” Woolf said.
Olson believed Arizona is a state that presents “robust opportunities for real estate investment, driven by population growth, economic expansion and infrastructure development.”
“However, stakeholders must navigate challenges such as affordability, water scarcity, climate risks and potential regulatory changes,” Olson said. “By staying informed and proactive, investors and developers can capitalize on the positive trends while mitigating potential downsides in these dynamic markets.”
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This article originally appeared on GOBankingRates.com: 7 Housing Market Predictions for Arizona Over the Next 5 Years, According to Real Estate Agents