Executive Summary 2Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Executive Summary
Housing Market Area Description
The Tucson, Arizona Housing Market Area (HMA) is
coterminous with the Tucson Metropolitan Statistical
Area (MSA), and Pima County. The city of Tucson
is the county seat and the largest city in the
HMA.
Incorporated towns include Marana, Oro Valley,
Sahuarita, and South Tucson.
The current population of the HMA is estimated at
1.06 million.
The Tucson HMA is along the United States–Mexico
border in the Sonoran Desert of Arizona, where a dry,
desert climate attracts vacationers and retirees. The
HMA is also home to the University of Arizona, the
Davis-Monthan Air Force Base, and two sovereign
nations, the Tohono O’odham Nation and the Pascua
Yaqui Tribe.
Tools and Resources
Find interim updates for this metropolitan area, and select geographies nationally, at PD&R’s
Market-at-a-Glance tool.
Additional data for the HMA can be found in this report’s supplemental tables.
For information on HUD-supported activity in this area, see the Community Assessment Reporting Tool.
Executive Summary 3Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Market Qualifiers
During the 12 months ending July 2022, nonfarm
payrolls in the Tucson HMA increased by 13,000
jobs, or 3.5 percent, to 387,400 jobs, compared
with a 4.4-percent increase nationwide. Before
the COVID-19 pandemic, the economy in the HMA
was stable, increasing by an average of 6,000
jobs, or 1.6 percent, annually from 2016 through
2019. During the 3-year forecast period, nonfarm
payroll growth is estimated to moderate and
average 1.5 percent annually, fully recovering the
jobs lost due to the pandemic in the first 2 years
of the forecast period.
The home sales vacancy rate is currently
estimated at 1.4 percent, down significantly from
2.9 percent in April 2010 when conditions were
soft. During the 12 months ending July 2022,
new and existing home sales in the HMA totaled
27,450, unchanged compared with a year earlier,
and the average sales price rose 15 percent
to $374,300 (Zonda, with adjustments by the
analyst). By comparison, sales and prices rose 17
and 19 percent, respectively, during the 12 months
ending July 2021. During the next 3 years, demand
is estimated for 10,550 new homes. The 2,700
homes currently under construction will satisfy
a portion of that demand.
Apartment market conditions are also balanced,
with a vacancy rate of 6.6 percent during the
second quarter of 2022, up from 4.6 percent
during the second quarter of 2021 when
conditions were tight (CoStar Group). The average
apartment rent in the HMA was $1,082 during
the second quarter of 2022, up 11 percent from
a year ago. During the next 3 years, demand is
estimated for 3,775 new rental units. The 1,650
units currently under construction will satisfy a
significant portion of that demand during the
forecast period.
Economy
Improving: Economic conditions in the
HMA improved during the past year,
following a year of nonfarm payroll
decline. By April 2022, the economy
had recovered 89 percent of the
45,900 nonfarm payroll jobs lost during
the recession of March and April 2020
(monthly data, not seasonally adjusted;
April is used as the latest monthly
comparison because of job seasonality
in the HMA).
Rental Market
Balanced: The estimated overall
rental vacancy rate is 7.0 percent,
down significantly from 11.3 percent
in April 2010, when rental market
conditions were soft.
Sales Market
Slightly Tight: As of July 2022, a
1.7-month supply of homes was
available for sale, up from 1.1 months
a year earlier and 1.4 months in July
2020 (Multiple Listing Service of
Southern Arizona).
TABLE OF CONTENTS
Economic Conditions 4
Population and Households 10
Home Sales Market 14
Rental Market 20
Terminology Definitions and Notes 24
3-Year Housing Demand Forecast
Sales Units Rental Units
Tucson HMA
Total Demand 10,550 3,775
Under Construction 2,700 1,650
Notes: Total demand represents estimated production necessary to achieve a balanced market at the end of the forecast period. Units under
construction as of August 1, 2022. The forecast period is August 1, 2022, to August 1, 2025.
Source: Estimates by the analyst
Economic Conditions 4Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Economic Conditions
Largest Sector: Government
The government sector provides a stable base for the local
economy, with an average of 75,000 jobs during the 12 months
ending July 2022, or 19 percent of all nonfarm payrolls in the HMA.
Primary Local Economic Factors
Anchored by the presence of the University of Arizona (UA) and the Davis-
Monthan Air Force Base (AFB), the government sector is the largest nonfarm
payroll sector in the Tucson HMA. Approximately 32 percent of the jobs in the
sector are in the state government subsector, including UA, the second largest
employer in the HMA, with 12,500 employees (Table 1) and approximately
39,100 students on its main campus in the city of Tucson as of fall 2021
(University of Arizona). The federal government subsector constitutes nearly
17 percent of all government jobs in the HMA. Although active-duty military
personnel are not included in nonfarm payroll data, Davis-Monthan AFB, the
fourth largest employer in the HMA, employs approximately 8,400 military
personnel and civilians, with an estimated economic impact of $3.0 billion
in the HMA during 2017 (Economic Impact of Arizona’s Principal Military
Operations 2017, The Maguire Company). The presence of the AFB supports
the aerospace manufacturing and research industry through contracts with
Raytheon Missiles & Defense, the largest employer in the HMA and one of
the largest manufacturers of unmanned aircraft in the nation. Statewide, the
aerospace and defense industry was awarded $17.3 billion in Department of
Defense contracts during 2020 (Arizona Commerce Authority).
The education and health services sector accounted for 68,600 jobs, or
18 percent of nonfarm payrolls in the HMA, during the 12 months ending
July 2022 (Figure 1). The growing share of retirees in the HMA contributes
to continued growth in the education and health services sector. As such, the
Education & Health Services 18%
Mining, Logging, & Construction 5%
Manufacturing 7%
Transportation
& Utilities 5%
Information 1%
Financial Activities
5%
Professional & Business
Services 12%
Leisure &
Hospitality 11%
Other Services
4%
Federal 3%
State 6%
Local 10%
Total
387.4
Government
19%
Wholesale 2%
Retail 11%
Trade 13%
Figure 1. Share of Nonfarm Payroll Jobs in the Tucson HMA, by Sector
Notes: Total nonfarm payroll is in thousands. Percentages may not add to 100 percent due to rounding.
Based on 12-month averages through July 2022.
Source: U.S. Bureau of Labor Statistics
Table 1. Major Employers in the Tucson HMA
Name of Employer Nonfarm Payroll Sector Number of Employees
Raytheon Missiles & Defense Manufacturing 13,300
University of Arizona Government 12,500
Banner - University Medical
Center Tucson
Education & Health Services 7,700
Davis-Monthan Air Force Base Government 8,400
Pima County Government Government 7,400
U.S. Customs and Border Protection Government 5,750
Freeport-McMoRan Inc. Mining, Logging, & Construction 5,525
State of Arizona Government 4,825
Walmart Inc. Wholesale & Retail Trade 4,775
Tucson Medical Center Government 4,350
Notes: Excludes local school districts. Data for Davis-Monthan AFB include active duty military personnel
who are not included in nonfarm payrolls.
Sources: Pima County Annual Comprehensive Financial Report, 2021; City of Tucson Annual Comprehensive
Financial Report, 2021
Economic Conditions 5Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
education and health services sector has been the second fastest growing
sector in the HMA during the past 2 decades (Figure 2).
Since 2001, the transportation and utilities sector has led payroll growth in
the HMA in percentage terms. Growth has been particularly strong since 2018,
increasing at an average rate of 14.5 percent a year. Since opening its first
site in the HMA in 2018, Amazon.com, Inc. has expanded to a total of four
distribution sites and is estimated to currently employ more than 2,000 full-
time employees. The transportation and utilities sector, with 20,800 jobs,
or 5 percent of all nonfarm payroll jobs in the HMA, has increased with a
growing number of e-commerce, warehousing, and distribution centers near
the Port of Tucson. This active inland port between the United States and
Mexico also impacts the wholesale and retail trade sector with approximately
49,300 jobs, or 13 percent of all nonfarm payrolls in the HMA.
Current Conditions—Nonfarm Payrolls and
Impacts of COVID-19
The impacts of the COVID-19 pandemic were significant in the Tucson HMA,
and nonfarm payrolls have yet to return to the prepandemic high. During March
and April 2020, nonfarm payrolls declined by 45,900, or nearly 12 percent of
total nonfarm payrolls in the HMA (monthly basis, not seasonally adjusted).
By April 2022, the local economy recovered 40,900 jobs, or 89 percent, of
nonfarm pandemic losses (April is used as the latest monthly comparison
because of job seasonality in the HMA).
During the 12 months ending July 2022, nonfarm payrolls in the HMA increased
by 13,000, or 3.5 percent, to 387,400 jobs (Table 2), compared with a loss of
8,200 jobs, or 2.1 percent, a year earlier. Job growth occurred in 9 of 11 sectors
during the period, and the largest gains were in the leisure and hospitality
sector, which increased by 6,300, or 17.3 percent, to 42,700, compared with a
decrease of 9.7 percent a year earlier. Job losses in the HMA during March and
April 2020 were greatest in the leisure and hospitality sector, which declined by
19,300 jobs, or 42.3 percent, accounting for 47 percent of all job losses during
the period (monthly basis, not seasonally adjusted). Payrolls in this sector as
Total Nonfarm Payroll Jobs
Goods-Producing Sectors
Mining, Logging, & Construction
Manufacturing
Service-Providing Sectors
Wholesale & Retail Trade
Transportation & Utilities
Information
Financial Activities
Professional & Business Services
Education & Health Services
Leisure & Hospitality
Other Services
Government
-50 -30 -10 30 50 70 90 110 130 15010
Change in Jobs (%)
Figure 2. Sector Growth in the Tucson HMA, 2001 to Current
Note: Current data are based on the 12-month averages ending July 2022.
Source: U.S. Bureau of Labor Statistics
Table 2. 12-Month Average Nonfarm Payroll Jobs (1000s)
in the Tucson HMA, by Sector
12 Months
Ending
July 2021
12 Months
Ending
July 2022
Absolute
Change
Percentage
Change
Total Nonfarm Payroll Jobs 374.4 387.4 13.0 3.5
Goods-Producing Sectors 47.0 48.0 1.0 2.1
Mining, Logging, & Construction 19.7 19.9 0.2 1.0
Manufacturing 27.4 28.0 0.6 2.2
Service-Providing Sectors 327.4 339.4 12.0 3.7
Wholesale & Retail Trade 48.5 49.3 0.8 1.6
Transportation & Utilities 18.5 20.8 2.3 12.4
Information 4.9 5.1 0.2 4.1
Financial Activities 18.8 18.6 -0.2 -1.1
Professional & Business Services 47.2 45.5 -1.7 -3.6
Education & Health Services 66.7 68.6 1.9 2.8
Leisure & Hospitality 36.4 42.7 6.3 17.3
Other Services 12.6 13.7 1.1 8.7
Government 73.8 75.0 1.2 1.6
Notes: Based on 12-month averages through July 2021 and July 2022. Numbers may not add to totals due to
rounding. Data are in thousands.
Source: U.S. Bureau of Labor Statistics
Economic Conditions 6Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
of July 2022 are down 1,700 jobs, or 3.7 percent
below prepandemic levels (monthly data, not
seasonally adjusted).
Job growth was also strong in the transportation
and utilities sector, with jobs increasing by 2,300,
or 12.4 percent, to 20,800 during the 12 months
ending July 2022, compared with a gain of 3,400
jobs, or 22.3 percent, a year earlier. During March
and April 2020, the transportation and utilities
sector declined slightly, by 200 jobs, or 1.4 percent,
but as of July 2022, the sector surpassed the
prepandemic level of 14,800 by 6,000 jobs, or 41
percent, compared with February 2020 (monthly
basis, not seasonally adjusted). Recent gains in
the sector were supported by the increased use
of e-commerce platforms and delivery services.
During the 12 months ending July 2022, the
education and health services sector increased
by 1,900 jobs, or 2.8 percent, compared with a
decline of 1,300 jobs, or 1.9 percent, a year prior.
A new Northwest Healthcare hospital opened in
2022, adding approximately 600 jobs. The only
two sectors to lose jobs during the 12 months
ending July 2022 were the financial services and
the professional and business services sectors,
down by 200 and 1,700 jobs, or 1.1 and 3.6 percent,
respectively. The large decrease in the professional
and business services sector was due in large
part to declines in the administrative and support
and waste management and remediation services
industries as work from home continued after the pandemic. After declining 5.4 percent during the 12 months
ending July 2021, the government sector regained momentum during the 12 months ending July 2022,
increasing by 1,200 jobs, or 1.6 percent. All of the gains were in the state and local government subsectors,
which benefitted from enhanced federal aid and the resumption of normal operations, including in-person
learning at UA.
Current Conditions—Unemployment
Before the impact of the COVID-19 pandemic, the unemployment rate in the Tucson HMA declined from
a high of 9.3 percent in 2010 to a low of 4.4 percent in 2018. Strong resident employment growth in the
HMA during the 12 months ending July 2022 contributed to an average unemployment rate of 3.6 percent
(Figure 3). By comparison, the average rate was 6.1 percent a year earlier, and it recently peaked at 7.8
percent during the 12 months ending February 2021. The current unemployment rate in the HMA is below
the 3.7-percent rate for Arizona and the 4.0-percent national rate.
Tucson HMA Nation
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
Unemployment Rate (%)
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Figure 3. 12-Month Average Unemployment Rate in the Tucson HMA and the Nation
Note: Based on the 12-month moving average.
Source: U.S. Bureau of Labor Statistics
Economic Conditions 7Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Economic Periods of Significance
2001 Through 2002
Following rapid expansion in the aerospace, teleservices, and optics industries
in the HMA, the dot-com recession combined with the September 11 attacks
during 2001 to negatively impact the local economy. During 2001 through
2002, nonfarm payrolls in the HMA decreased by an average of 2,000 jobs, or
0.6 percent, a year. By comparison, nonfarm payrolls in the nation decreased
by an average of 0.5 percent annually. The leisure and hospitality sector
led overall job losses in the HMA, decreasing by 1,300 jobs, or 3.3 percent,
annually. Manufacturing payrolls declined by an average of 1,200 jobs, or 3.5
percent, annually, partly because of a 550-job layoff at Bombardier Aerospace
in 2002—layoffs that resulted from the downturn in the aerospace industry
following September 11, 2001. Offsetting some of these losses were gains in
the government sector, which added an average of 800 jobs, or 1.1 percent,
annually. The local government subsector added an average of 900 jobs, or
2.1 percent, whereas the state subsector remained unchanged, and the federal
subsector declined by 100 jobs, or 0.5 percent, annually.
2003 Through 2007
Economic conditions in the HMA strengthened during the subsequent
5 years, and very strong population growth occurred during the period,
leading to continued growth in service-providing sectors. From 2003
through 2007, nonfarm payrolls increased by an average of 8,500 jobs, or
2.4 percent, annually, reaching a high of 385,600 jobs in 2007 (Figure 4). By
comparison, nonfarm payrolls in the nation increased by an average of 1.1
percent annually during this period. Economic expansion in the HMA during
the period was partly a result of significant growth in the professional and
business services sector, as the aerospace industry strengthened, and from
gains in the education and health services sector to meet the needs of the
growing population. From 2003 through 2007, these two sectors each added
an average of 2,200 jobs annually, or 4.9 and 4.7 percent, respectively.
Meanwhile, the government sector added an average of 600 jobs, or
National Recession Nonfarm Payrolls
400
390
380
370
360
350
340
Jul-00
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Nonfarm Payrolls (in Thousands)
Note: 12-month moving average.
Sources: U.S. Bureau of Labor Statistics; National Bureau of Economic Research
Figure 4. 12-Month Average Nonfarm Payrolls in the Tucson HMA
0.8 percent, a year, with growth attributed to the federal and local government
subsectors, which had respective average annual increases of 300 and 500
jobs, or 2.7 percent and 1.1 percent, whereas the state government subsector
lost an average of 100 jobs, or 0.5 percent, annually. Growth in the government
sector was partly due to the establishment of the U.S. Department of Homeland
Security in March 2003 in response to the September 11 attacks.
2008 Through 2010
The HMA economy contracted from 2008 through 2010, in large part because
of the Great Recession and the national housing downturn. Nonfarm payrolls
in the HMA decreased by an average of 10,800 jobs, or 2.9 percent, annually
throughout the period. Payrolls in 9 of the 11 payroll sectors declined during
the period in the HMA. The mining, logging, and construction sector lost the
Economic Conditions 8Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
most jobs, down by an average of 3,800 jobs, or 15.8 percent, annually,
partly because the Freeport-McMoRan Inc. mining company laid off 1,500
workers throughout the state due to a decline in metal demand. Residential
construction declined in response to decreased population growth as many
residents sought jobs in larger employment centers, including the nearby
Phoenix-Mesa-Scottsdale metropolitan area (hereafter Phoenix metropolitan
area). During the 3-year downturn, the only two sectors to add jobs were the
education and health services and the government sectors, which increased
by an average of 1,200 and 100 jobs, or 2.1 and 0.1 percent, respectively. In
the government sector, the federal government subsector added an average
of 800 jobs, or 6.8 percent, offsetting losses of 100 and 600 jobs, or 0.1 and
1.5 percent, in the state and local government subsectors, respectively.
2011 Through 2015
The economy in the Tucson HMA began to improve in 2011, but economic
growth was relatively slow compared with the height of the early 2000s.
From 2011 through 2015, nonfarm payrolls rose by an average of 2,800
jobs, or 0.8 percent, annually. During the period, job gains in the HMA were
led by the education and health services and the leisure and hospitality
sectors, which each rose by a respective average of 900 jobs, or 1.4 and 2.3
percent, annually. Job losses in the manufacturing sector did occur, however,
averaging 200 jobs, or 0.9 percent, annually, as the collapse in demand for
durable goods during the Great Recession continued throughout the period.
A decline in oil prices in 2014 and a continued decline in copper prices since
2011 contributed to zero growth in the mining, logging, and construction
sector during the period. The government sector declined by an average
of 400, or 0.5 percent, annually, and the local government and federal
government subsectors declined by respective averages of 500 and 100 jobs,
or 1.3 and 0.6 percent. Offsetting losses were gains of 200, or 0.9 percent, in
the state government subsector.
2016 Through 2019
Economic growth in the Tucson HMA accelerated during 2016, and by 2018,
nonfarm payrolls surpassed the prerecession high of 2007. By comparison,
nationally, payrolls recovered to the prerecession high by 2014. From 2016
through 2019, nonfarm payrolls in the HMA increased by an average of
6,000 jobs, or 1.6 percent, annually. The education and health services
sector added the most jobs during the period, with an average annual
increase of 1,400 jobs, or 2.2 percent. In 2016, the UA Health Network
merged with Banner Health, one of the largest nonprofit healthcare systems
in the country, to form the private company Banner-University Medical
Center Tucson, the third largest employer in the HMA. The merger included
a $500 million investment, resulting in hospital expansions throughout the
period to meet the needs of residents. After a long period of decline, jobs
in the manufacturing sector began to increase, and from 2016 through 2019,
the sector had average gains of 1,100 jobs, or 4.2 percent, annually, due in
part to increases in the manufacturing of aerospace and renewable energy
products. Downtown revitalization projects throughout the period, including
several new businesses, hotels, and restaurants, contributed to the mining,
logging, and construction sector increasing by an average of 800 jobs, or
4.3 percent, annually. Job gains during the period were also supported by
Caterpillar Inc. completing construction of their $50 million, 150,000 square-
foot headquarters in 2019. Partly because of new Amazon.com, Inc. fulfillment
centers, the transportation and utilities sector increased the fastest throughout
the period, adding an average of 1,000 jobs, or 8.4 percent, annually. Partly
offsetting nonfarm payroll gains during the period, however, were losses in
the wholesale and retail trade sector, declining by an average of 300, or
0.5 percent, a year, partly because of a shift toward online shopping.
Economic Conditions 9Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Agriculture and Water
Agriculture in Pima County accounts for approximately 0.2 percent of private
employment with an economic impact of $64.5 million to the county (College
of Agriculture and Life Sciences, University of Arizona). According to the 2017
United States Department of Agriculture census of farms, there were 661 farms
in the HMA encompassing approximately 29,200 acres of cropland and over
2.5 million acres of pastureland with nursery, greenhouse, floriculture,
sod, cotton, and cattle as the major agricultural commodities in the county.
Approximately 28 percent of water usage in the county is attributed to
agricultural use (2015 United States Geological Survey). Amid the past two
decades of drought, the water levels of Lake Mead, which distributes Colorado
River water allocated to Arizona, California, Nevada, and Mexico, have
continued to decline. The U.S. Department of the Interior recently announced
the Colorado River had reached a Tier 2 shortage to start January 2023, further
reducing the amount of water that Arizona, Nevada, and Mexico can claim
from the river. Of the impacted states, Arizona will face the largest cuts of
approximately 21 percent of the state’s yearly allotment of river water. The most
recently announced cuts will disproportionately impact the agricultural sector.
Forecast
During the 3-year forecast period, economic recovery is expected to continue,
but moderate, in the HMA, with nonfarm payrolls increasing by an average of
1.5 percent annually. Jobs lost due to the pandemic are estimated to be fully
recovered in the first 2 years of the forecast period. Job growth is expected to be
strongest during the first year of the forecast, partly because of continued strong
gains in the transportation and utilities sector and continued use of e-commerce.
Amazon.com, Inc. is expected to open a new distribution site by the end of 2022
in the town of Marana, creating hundreds of new jobs. Steady growth is also
expected in the education and health services and the government sectors.
Population and Households 10Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Population and
Households
Current Population: 1.06 Million
Since 2020, population growth in the
Tucson HMA has slowed, in part because
of negative net natural change.
Population Trends
Population trends have generally mirrored
economic conditions in the Tucson HMA since
2000. The current population of the Tucson HMA
is estimated at 1.06 million, reflecting an average
increase of 6,525, or 0.6 percent, annually since
2010 (Table 3). From 2000 to 2007, a period
that included both an economic contraction and
expansion, the population of the HMA increased
by an average of 15,450, or 1.7 percent, annually
(U.S. Census Bureau decennial census count
and population estimates as of July 1; Figure 5).
During this period, the population grew rapidly,
largely the result of high levels of net in-migration,
propelled by strong economic growth following
the dot-com recession and robust net natural
change. Net in-migration averaged 10,300 people
a year from 2000 to 2007, and net natural change
averaged 5,150 people annually. Population
growth slowed significantly, however, with the
onset of the Great Recession in 2007, averaging
a gain of 7,875 people, or 0.8 percent, a year
from 2007 to 2011, because of a combination of
Table 3. Tucson HMA Population and Household Quick Facts
Population
Quick Facts
2010 Current Forecast
Population 980,263 1,061,000 1,086,000
Average Annual Change 13,650 6,525 8,425
Percentage Change 1.5 0.6 0.8
Household
Quick Facts
2010 Current Forecast
Households 388,660 435,900 448,600
Average Annual Change 5,625 3,825 4,225
Percentage Change 1.6 0.9 1.0
Notes: Average annual changes and percentage changes are based on averages from 2000 to 2010, 2010 to current, and current to forecast.
The forecast period is from the current date (August 1, 2022) to August 1, 2025.
Sources: 2000 and 2010—2000 Census and 2010 Census; current and forecast—estimates by the analyst
2000–2001
2001–2002
2002–2003
2003–2004
2004–2005
2005–2006
2006–2007
2007–2008
2008–2009
2009–2010
2010–2011
2011–2012
2012–2013
2013–2014
2014–2015
2015–2016
2016–2017
2017–2018
2018–2019
2019–2020
2020–2021
2021–Current
Current–Forecast
25,000
20,000
15,000
10,000
5,000
0
-5,000
Population Change
Net Natural Change Net Migration Population Growth
Figure 5. Components of Population Change in the Tucson HMA, 2000 Through the Forecast
Notes: Data displayed are average annual totals. The forecast period is from the current date August 1, 2022 to August 1, 2025.
Sources: U.S. Census Bureau; current to forecast—estimates by the analyst
Population and Households 11Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
decreased net natural change, averaging 4,650
people a year, and a significant reduction in net
in-migration, averaging 3,225 people annually.
From 2007 to 2011, there was a net out-migration
of approximately 1,700 Pima County residents
to nearby Pinal County, part of the Phoenix
metropolitan area, because historically low
housing prices attracted HMA residents who were
previously commuting to the county (County-
to-County Migration Flows, 5-year American
Community Survey [ACS] data; Arizona Office of
Employment). Both net natural change and net in-
migration continued to decline, and from 2011 to
2015, population growth averaged 4,600 people,
or 0.5 percent, annually. During the period, net
in-migration averaged 1,575 people annually, and
net natural change slowed to an average of 3,025
people a year. An increase in older residents over
65 years of age, combined with declining birth
rates, contributed to the overall slowing of net
natural change in the HMA. From 2015 to 2019,
net natural change slowed further, to an average
of 1,275 people a year, but population
growth
accelerated to an average of 7,275, or 0.7 percent,
a year, and net in-migration increased to an
average of 6,000 people annually. Migration
into the HMA from 2015 to 2019 was primarily
from the neighboring Phoenix metropolitan
area (Table 4) but also the result of business
relocations and expansions in the aerospace
and defense industries. Since 2019, the population
of the HMA has increased by an average of
Table 4. Metro-to-Metro Migration Flows in the Tucson HMA: 2015–2019
Into the HMA
Phoenix-Mesa-Chandler, AZ Metro Area 11,601
San Diego-Chula Vista-Carlsbad, CA Metro Area 1,063
Los Angeles-Long Beach-Anaheim, CA Metro Area 1,029
Austin-Round Rock-Georgetown, TX Metro Area 943
Sierra Vista-Douglas, AZ Metro Area 936
Out of the HMA
Phoenix-Mesa-Chandler, AZ Metro Area 11,191
Los Angeles-Long Beach-Anaheim, CA Metro Area 2,319
Sierra Vista-Douglas, AZ Metro Area 2,107
San Diego-Chula Vista-Carlsbad, CA Metro Area 1,603
Seattle-Tacoma-Bellevue, WA Metro Area 1,449
Source: U.S. Census Bureau Migration Flows, 2015–2019 American Community Survey 5-year data
8,375 people a year, or 0.8 percent, entirely the result of a surge in net in-migration, which averaged
9,275 people a year. During the same period, net natural decline averaged 900 people a year, mostly
because of a continued decrease in the number of births and an elevated number of deaths stemming
from the effects of COVID-19.
Population by Geography
The population of the HMA is generally concentrated in the eastern portion of the county, where the city
of Tucson is located. More than 543,200 residents, or approximately 52 percent of the HMA population,
resided in the city of Tucson as of July 1, 2021 (ACS 1-year estimates). From 2016 to 2021, the population of
the city of Tucson expanded by an average of 2,500, or 0.5 percent, a year, slower than respective averages
of 1.8, 4.2, and 4.6 percent, annually, in the towns of Oro Valley, Sahuarita, and Marana, the fastest growing
jurisdictions in the HMA (ACS 1-year supplemental estimates). The western portion of the HMA is generally
Native American Reservation land and covers approximately 42 percent of the land in Pima County.
Age Cohort Trends
In-migration of retirees and the declining number of those under 18 years of age are contributing to an
overall increase in the median age in the HMA. The median age in the Tucson HMA during 2021 was
Population and Households 12Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
39.1 years, up from 37.8 years in 2010 (2021 and 2010 ACS 1-year data).
By comparison, the median age in the nation during 2021 was 38.8 years,
up from 37.2 years in 2010. From 2010 through 2021, the retirement-age
portion of the population, generally defined as residents aged 65 and older,
increased by an average of 5,925, or 3.3 percent, annually in the HMA (ACS
1-year estimates). The rising share of residents in the over-65 age cohort,
which increased from less than 16 percent to more than 20 percent of the
total population during the period, has also contributed to slowing net natural
change (Figure 6). By comparison, the working-age population in the HMA,
generally those aged 18 to 64 years, increased by an average of 1,475 people,
or 0.2 percent, a year, and the population under 18 years old declined by an
average of 1,050 people, or 0.5 percent, a year throughout the period.
30%
25%
20%
15%
10%
5%
0%
Under 18
Years
18 to 24
Years
25 to 44
Years
45 to 64
Years
65 Years
and Over
2010 2021
Source: 2021 American Community Survey 1-year data
Figure 6. Population by Age Range in the Tucson HMA
65.0
64.8
64.6
64.4
64.2
64.0
63.8
63.6
63.4
63.2
63.0
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2000 2010 Current
Homeownership Rate (%)
Households
RenterOwner Homeownership Rate
6 4.1
63.3
64.3
Figure 7. Households by Tenure and Homeownership Rate in the Tucson HMA
Note: The current date is August 1, 2022.
Sources: 2000 and 2010—2000 Census and 2010 Census; current—estimates by the analyst
Household Trends
Changing household composition, including smaller household sizes due in
part to the prevalence of older residents, has contributed to slightly faster
household growth than population growth in the HMA since 2000. As of
August 1, 2022, an estimated 435,900 households reside in the Tucson HMA,
reflecting an average annual increase of 3,825 households, or 0.9 percent,
since April 2010—a faster pace than the 0.6-percent population growth rate
in the HMA during the same period. The slightly faster pace in household
growth compared with population growth since 2010 was partly due to rapid
new household formation following the COVID-19 pandemic, particularly
smaller households. Currently, an estimated 63.3 percent of households are
homeowners, down from 64.1 percent in 2010 (Figure 7).
Population and Households 13Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Forecast
During the next 3 years, the population of the HMA is expected to increase
by an average of 8,425, or 0.8 percent, annually, to nearly 1.09 million. That
growth rate is higher than the estimated 2020-to-current rate of 7,200, or 0.7
percent, annually, as the HMA continues to recover from negative net natural
change associated with elevated deaths during the COVID-19 pandemic.
Most of the population growth will be due to continued net in-migration.
Household growth is expected to average 4,225, or 1.0 percent, annually,
reaching 448,600 households in the HMA by the end of the forecast period.
Home Sales Market 14Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Home Sales Market
Market Conditions: Slightly Tight
During the 3 months ending July 2022, home sales declined 14 percent,
and home sales prices rose 13 percent, compared with sales and prices
increasing 12 and 19 percent, respectively, during the 3 months ending
July 2021 (Zonda, with adjustments by the analyst).
Current Conditions
The sales housing market in the Tucson HMA is slightly tight, with an estimated
sales vacancy rate of 1.4 percent (Table 5), down significantly from 2.9 percent
in April 2010, when the market was soft. The HMA was significantly impacted
by the housing crisis, due in part to substantial building and lenient mortgage
lending standards during the mid-2000s. Increased job growth and net in-
migration during most years of the latter 2010s led to tighter housing market
conditions. As of July 2022, a 1.7-month supply of homes was available for
sale in the HMA, up from 1.1 months a year earlier and 1.4 months in July 2020
(Multiple Listing Service of Southern Arizona). By comparison, the supply of
homes available for sale was 3.6 months in 2011. During the 12 months ending
July 2022, home sales (including new and existing homes) totaled 27,450,
relatively unchanged from the previous 12 months (Zonda, with adjustments
by the analyst). Recently, however, the rising cost of homeownership resulted
in home sales declining 14 percent during the 3 months ending July 2022,
compared with the 3 months ending July 2021, when home sales market
conditions were tighter. During the 12 months ending July 2022, the average
home sales price increased approximately 15 percent to $374,300, compared
with a 19-percent increase a year earlier. More recently, however, home sales
prices rose 13 percent during the 3 months ending July 2022, compared with
a 19-percent increase a year ago. Figure 8 shows the share of home sales by
price range during the 12 months ending July 2022.
Table 5. Home Sales Quick Facts in the Tucson HMA
Home Sales
Quick Facts
Tucson HMA
Nation
Vacancy Rate 1.4% NA
Months of Inventory 1.7 1.9
Total Home Sales 27,450 7,030,000
1-Year Change 0% -9%
Existing Sales Price $370,000 $425,500
1-Year Change 16% 12%
New Sales Price $415,300 $471,500
1-Year Change 11% 14%
Mortgage Delinquency Rate 0.9% 1.4%
NA = data not available.
Notes: The vacancy rate is as of the current date; home sales and prices are for the 12 months ending
July 2022; and months of inventory and mortgage delinquency data are as of July 2022. The current date
is August 1, 2022.
Sources: Vacancy rate—estimates by the analyst; months of inventory and mortgage delinquency rate—
CoreLogic, Inc.; home sales and prices—Zonda
35
30
25
20
15
10
5
0
$0 to
$99k
$100k to
$199k
$200k to
$299k
$300k to
$399k
$400k to
$499k
$500k and
More
Share of Sales (%)
Existing Sales New Sales
Note: New and existing sales include single-family homes, townhomes, and condominium units.
Source: Zonda
Figure 8. Share of Overall Sales by Price Range During the
12 Months Ending July 2022 in the Tucson HMA
Home Sales Market 15Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Investor purchases, as a share of all residential
purchases in the HMA, increased from approximately
31 percent during the second quarter of 2021 to
nearly 39 percent during the second quarter of
2022 (John Burns Real Estate Consulting, LLC). By
comparison, during 2011, when investor purchases
peaked, approximately 55 percent of home sales
were investor purchases, before generally trending
downward to a low of 21 percent during 2020.
Existing Home Sales and Prices
The number of existing home sales, which
includes resale sales, real estate owned (REO)
home sales, and short sales, was generally high
during the early to mid-2000s. After a high of
25,100 existing sales in 2005, the number of
existing homes sold declined by an average of
18 percent a year from 2006 through 2008 to
a low of 13,950 existing sales in 2008 (Zonda;
Figure 9). Economic conditions in the HMA
weakened, and population growth declined
because of the national recession and housing
crisis. Existing home sales subsequently
increased an average of 5 percent a year from
2009 to 2013, to 17,550 sales, as many distressed
sales entered the market, but existing home sales
declined to 16,250 homes sold during 2014. As
population growth increased, so too did demand
for housing, and beginning in 2015, existing home
sales increased by an average of 930 homes, or
5 percent, annually, culminating in 20,900 homes
sold in 2019. The number of existing home sales
32,000
28,000
24,000
20,000
16,000
12,000
8,000
4,000
0
Sales Totals
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Existing Sales New Sales
Figure 9. 12-Month Sales Totals by Type in the Tucson HMA
Source: Zonda, with adjustments by the analyst
increased further to 21,450 homes sold in 2020, largely in response to historically low mortgage interest
rates, especially in the latter part of 2020. During the 12 months ending July 2022, 24,900 existing homes
sold, up 2 percent from a year earlier. During the 3 months ending July 2022, however, the number of
existing home sales declined approximately 10 percent, compared with the 3 months ending July 2021,
as increased mortgage rates recently tempered housing demand.
Although the average existing home sales price in the HMA has increased each year since 2012, the
HMA was slow to recover existing home values after the housing market crash of 2008. During 2006
through 2007, before the local economic downturn, the average price for an existing home in the HMA
increased by an average of $12,050, or 5 percent, annually, to a high of $269,500 in 2007 (Figure 10).
From 2008 through 2011, the average price declined by an average of $25,100, or 11 percent, annually,
to a low of $169,000 in 2011. Lower demand for existing home sales in the HMA, stemming from local
job losses, contributed to a decrease in the average existing home sales price during the period. Even
as economic growth remained low compared with the early 2000s, existing housing prices remained
strong from 2012 through 2014, increasing an average of $10,500, or 6 percent, annually, in large part
Home Sales Market 16Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
because of heightened investor purchases
following the housing market crisis (John Burns
Real Estate Consulting, LLC). From 2015 through
2019, increased demand for existing home sales
continued because of stronger job growth,
despite a declining share of investor purchases.
The average price of an existing home increased
during the period, by an average of 5 percent a
year, to $252,500 in 2019. Demand for existing
homes increased, but a declining inventory of
existing homes available for sale during the
COVID-19 pandemic placed further upward
pressure on existing home prices. During 2020,
the average price of an existing home increased
by $29,650, or 12 percent, to $282,100. During
the 12 months ending July 2022, the average
price of an existing home increased 16 percent
to a new high of $370,000, compared with a
21-percent increase a year earlier. More recently,
however, existing home sales price growth
slowed to 14 percent during the 3 months ending
July 2022, compared with a 20-percent increase
during the same period a year ago.
New Home Sales and Prices
New home sales have not rebounded to the
number of new homes sold prior to the local
housing market downturn in the late 2000s, when
lending standards were more lenient and new
housing construction was more abundant. New
home sales peaked in 2006 at 9,350 new homes
sold. In response to the national recession and
the local impact of the housing crisis, the number
450,000
400,000
350,000
300,000
250,000
200,000
150,000
Jul-06
Jul-07
Jul-08
Jul-09
Jul-10
Jul-11
Jul-12
Jul-13
Jul-14
Jul-15
Jul-16
Jul-17
Jul-18
Jul-19
Jul-20
Jul-21
Jul-22
Average Sales Price ($)
New Sales Prices Existing Sales Prices
Figure 10. 12-Month Average Sales Price by Type of Sale in the Tucson HMA
Source: Zonda, with adjustments by the analyst
of new home sales declined during each of the 5 subsequent years by an average of 1,600, or 32 percent,
annually, to 1,350 new homes sold in 2011. New home sales rose slightly, to an average of 1,650 a year,
from 2012 through 2015. From 2016 through 2019, when economic and population growth increased, new
home sales generally increased, up 13 percent annually, to 3,050 new homes sold in 2019. The number of
new home sales increased another 4 percent during 2020, largely because of rising demand and the low
supply of existing homes available for sale during the COVID-19 pandemic. Rising mortgage rates, persistent
labor shortages, and ongoing supply chain challenges, however, constrained new home sales. During the
12 months ending July 2022, approximately 2,525 new homes sold, down nearly 18 percent from the 3,075
new homes sold during the previous 12 months. The decrease has been more severe recently, with new
home sales declining nearly 47 percent during the 3 months ending July 2022, compared with increasing
6 percent during the 3 months ending July 2021, when new home sales market conditions were tighter.
The average new home sales price in the HMA declined sharply during the housing crisis in the late
2000s, but new home sales prices recently increased significantly as the inventory of new homes has
generally trended downward since the highs of the early 2000s. After reaching a high of $275,700 in
Home Sales Market 17Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
2006, the average new home sales price declined as the market softened,
falling an average of 5 percent annually from 2007 through 2011 to a low
of $210,200 in 2011. With a stronger economy, prices rose an average of 11
percent a year during 2012 and 2013, before declining less than 1 percent in
2014, as slower economic growth occurred in the HMA. From 2015 through
2020, new home sales prices increased an average of 5 percent a year, to
$349,300 in 2020, as net in-migration increased each year during the 6-year
period. During the 12 months ending July 2022, the average sales price of a
new home increased by $42,100, or 11 percent, to $415,300, compared with an
average increase of 11 percent during the previous 12 months. More recently,
however, new home sales price growth has slowed to 8 percent during the
3 months ending July 2022, compared with a 10-percent increase a year ago.
REO Sales and Delinquent Mortgages
The housing crisis in the mid-to-late 2000s had a significant effect on loan
delinquencies in the HMA, but the market has improved since then. The
percentage of seriously delinquent mortgage loans and REO properties in the
HMA peaked at 7.7 percent in February 2010, 1 month after the peak rates for
Arizona and the nation of 12.0 and 8.6 percent (CoreLogic, Inc.), respectively.
The rate in the HMA generally declined to a low of 0.8 percent during
December 2019. The economic contraction caused by the impacts of the
COVID-19 pandemic contributed to an overall increase in the rate of seriously
delinquent and REO properties in the HMA as homeowners struggled to
make mortgage payments, reaching a high of 3.3 percent in September
2020, compared with a 3.0-percent rate statewide and a 4.3-percent rate
nationwide. The increase in the rate in the HMA from January to September
2020 was due to a 320 percent increase in the number of home loans that
were 90 or more days delinquent. During the same period, the number of
home loans that were in foreclosure declined 52 percent as many residents
took advantage of mortgage forbearance programs. As of July 2022, the rate
of seriously delinquent loans and REO properties in the HMA was 0.9 percent,
down from 2.2 percent a year ago; that proportion is below the 1.4 percent
rate for the nation but slightly above the 0.7-percent rate for Arizona.
Housing Affordability
Affordability in the HMA declined significantly during the past year. The
affordability of homes in the Tucson HMA has generally trended downward
since the early 2010s as home price increases have exceeded income growth.
The National Association of Home Builders (NAHB)/Wells Fargo Housing
Opportunity Index (HOI), which represents the share of homes sold that would
have been affordable to a family earning the local median income,
was 40.6
for the HMA during the second quarter of 2022, down significantly
from 65.3
during the second quarter of 2021, as home prices increased significantly
since 2020 (Figure 11). The median prices for homes increased
over 24
percent, whereas median incomes rose 18 percent during the period
(NAHB).
By comparison, 42.8 percent of new and existing homes nationally were
considered affordable during the second quarter of 2022, down from 56.6
percent the previous year. The HOI has declined since reaching a high of 87.7
90
80
70
60
50
40
2012 Q2
2013 Q2
2014 Q2
2015 Q2
2016 Q2
2017 Q2
2018 Q2
2019 Q2
2020 Q2
2021 Q2
2022 Q2
NAHB/Wells Fargo Housing
Opportunity Index
Figure 11. Tucson HMA Housing Opportunity Index
NAHB = National Association of Home Builders. Q2 = second quarter.
Sources: NAHB; Wells Fargo
Home Sales Market 18Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
in the HMA during the second quarter of 2012.
The median home price in the MSA has increased
approximately 160 percent since the second
quarter of 2012, and the median income increased
30 percent (NAHB). Approximately 62 percent of
the 240 ranked metropolitan areas were more
affordable than the Tucson HMA during the
second quarter of 2022. Homeownership remains
relatively affordable in the HMA, however, when
compared with many nearby metropolitan areas,
including Los Angeles, Phoenix, and San Diego,
where the respective HOIs were 3.6, 22.3, and
6.9 during the second quarter of 2022.
Sales Construction Trends
Sales construction activity in the HMA, as
measured by the number of single-family
homes, townhomes, and condominium units
permitted, has trended upwards since 2016.
Sales construction activity increased during the
most recent 12 months, but it is significantly
below the historically high levels reached during
the mid-2000s, when a peak of 11,300 homes
were permitted during 2005. Beginning in 2006,
sales construction activity fell by an average of
29 percent annually to a low of 1,400 homes
permitted in 2011, as builders responded to
declining home prices (Figure 12). From 2012
through 2015, an average of 2,350 homes
were permitted each year in response to rising
new home sales. Stronger home sales demand
stemming from an expanding local economy
12,000
10,000
8,000
6,000
4,000
2,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
12 ME Jul 2021
12 ME Jul 2022
Single-Family Homes/Townhomes
Single-Family Homes/Townhomes 12 ME
Condominiums
Condominiums 12 ME
Figure 12. Annual Sales Permitting Activity in the Tucson HMA
12 ME = 12 months ending.
Sources: U.S. Census Bureau, Building Permits Survey; 2000–21—final data and estimates by the analyst; past 24 months of data—preliminary data
and estimates by the analyst
and increased net in-migration contributed to an increase in homebuilding, and the number of homes
permitted increased an average of 14 percent annually from 2016 through 2020. During the 12 months
ending July 2022, 4,650 homes were permitted in the HMA, a 9-percent decrease from the previous
12 months (preliminary data and estimates by the analyst).
New Sales Construction
During the 12 months ending July 2022, more than 80 percent of home construction activity was
concentrated in the unincorporated areas of the HMA, in the town of Marana, and in the city of Tucson.
In the fast-growing town of Marana, approximately 20 miles northwest of the city of Tucson, a new
community, The Legends at Gladden Farms, is projected to open in September 2022. Construction began
at the master-planned community Gladden Farms in 2002 but stalled in 2009 during the housing crisis. New
owners acquired the property in 2013 and increased production during 2016, with multiple subdivisions
added on the 1,340 acres and 2,100 homes completed as of 2021. Approximately 4,000 homes are
Home Sales Market 19Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
expected at buildout. At The Legends subdivision, approximately 140 home
lots are available. Prices start in the low $300,000s for a three-bedroom
home and range in size from approximately 1,250 to 2,200 square feet.
Entrada La Coraza at Rancho Sahuarita, a single-family home community
under construction in the town of Sahuarita, is expected to have 144 homes
upon completion, with prices starting from $350,000.
Forecast
During the next 3 years, demand is expected for an estimated 10,550 new
homes in the HMA (Table 6). The estimated 2,700 homes currently under
construction are expected to satisfy a large portion of the estimated demand
during year 1 of the forecast period. Most of the demand will be for new homes
priced below $350,000. New development will be constrained to areas where an
assured 100-year water supply certificate exists or is approved from the Arizona
Department of Water Resources (ADWR).
Table 6. Demand for New Sales Units in the Tucson HMA
During the Forecast Period
Sales Units
Demand 10,550 Units
Under Construction 2,700 Units
Note: The forecast period is from August 1, 2022, to August 1, 2025.
Source: Estimates by the analyst
Rental Market 20Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Rental Market
Market Conditions: Balanced
Job growth and elevated net in-migration since 2015 have contributed
to currently balanced rental market conditions compared with soft
conditions in 2010.
Current Conditions and Recent Trends
The rental housing market in the Tucson HMA is balanced, with a current
overall rental vacancy rate estimated at 7.0 percent (Table 7). Rental market
conditions have improved since April 2010, when the rental vacancy rate was
11.3 percent and conditions were soft. The apartment market is also currently
balanced, having improved since 2010, when conditions were soft. The
average apartment vacancy rate during the second quarter of 2022 was 6.6
percent, up from 5.8 and 4.6 percent during the second quarters of 2020 and
2021, respectively, and well below the 11.3-percent rate during the second
quarter of 2010 (CoStar Group). Rental market conditions have improved since
2010 despite a significant increase in unsold homes that converted to the
rental market. Single-family homes represented approximately 29 percent
of renter-occupied units in 2000 and rose to 40 percent in 2010 (ACS 1-year
data). In 2019, renter-occupied single-family homes in the HMA accounted
for approximately 38 percent of the total number of occupied rental units.
Apartment Market Trends
Apartment market conditions in the HMA are balanced, with a vacancy rate of
6.6 percent during the second quarter of 2022, compared with 4.6 percent a
year ago, and the average asking rent increased 11 percent to $1,082 (CoStar
Group). Apartment market conditions in the HMA were generally soft during
most of the 2000s, with very modest rent growth and generally high vacancy
rates. During the second quarters of 2000 through 2002, vacancies increased
from 7.1 to 9.9 percent, and the average rent increased 3 percent to $598
(Figure 13). Between the second quarter of 2003 through the second quarter
of 2005, the apartment vacancy rate in the HMA declined to 8.1 percent, and
rent growth was flat. Overbuilding of apartments in the early 2000s, combined
with a strong competing home sales market, contributed to persistently high
average apartment vacancy rates throughout the period. By the second quarter
of 2006, the average apartment vacancy rate had decreased to 6.3 percent,
Rental Market
Quick Facts
2010 (%) Current (%)
Rental Vacancy Rate 11.3 7.0
2010 (%) 2019 (%)
Occupied Rental Units by Structure
Single-Family Attached & Detached 40 38
Multifamily (2–4 Units) 11 12
Multifamily (5+ Units) 43 45
Other (Including Mobile Homes) 6 5
Notes: The current date is August 1, 2022. Percentages may not add to 100 due to rounding.
Sources: 2010 vacancy rate—2010 Census; current vacancy rate—estimate by the analyst; occupied rental
units by structure—2010 and 2019 American Community Survey 1-year data; apartment data—CoStar Group
Table 7. Rental and Apartment Market Quick Facts in the Tucson HMA
Average Monthly Rent Vacancy Rate
11.5
10.5
9.5
8.5
7.5
6.5
5.5
4.5
1,100
1,000
900
800
700
600
500
400
2000 Q2
2001 Q2
2002 Q2
2003 Q2
2004 Q2
2005 Q2
2006 Q2
2007 Q2
2008 Q2
2009 Q2
2010 Q2
2011 Q2
2012 Q2
2013 Q2
2014 Q2
2015 Q2
2016 Q2
2017 Q2
2018 Q2
2019 Q2
2020 Q2
2021 Q2
2022 Q2
Vacancy Rate (%)
Average Monthly Rent ($)
Figure 13. Apartment Rents and Vacancy Rates in the Tucson HMA
Q2 = second quarter.
Source: CoStar Group
Rental Market 21Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
however, and rents increased 3 percent to $617. Demand for apartments
decreased during the Great Recession, and the apartment vacancy rate
increased from 7.0 percent during the second quarter of 2007 to 11.4 percent
by the second quarter of 2009, when the average rent for an apartment was
$644. By the second quarter of 2010, apartment rents declined to an average
of $634, and the average apartment vacancy rate was 11.3 percent. Vacancy
rates declined beginning in 2011, from 10.5 percent during the second quarter
of 2011 to 9.1 percent during the second quarter of 2013. Apartment rents
averaged $660 during the second quarter of 2013, an average annual increase
of 2 percent since the second quarter of 2011. Relatively slower household
growth, however, combined with more available single-family homes for rent,
kept apartment vacancies high. During the second quarter of 2014, the average
apartment vacancy rate was 9.5 percent, and apartment rents averaged $673.
Largely attributed to significantly increased net in-migration and declining
rental construction, particularly during 2015 through 2016, the apartment
vacancy rate declined as measured in the second quarter of each year from
2015 through 2021, reaching 4.6 percent by the second quarter of 2021. The
average rent for an apartment was $973 during the second quarter of 2021.
From the second quarter of 2015 through the second quarter of 2019, rent
growth in the HMA averaged 4 percent a year and then accelerated to an
average of 15 percent annually from the second quarter of 2020 through
the second quarter of 2021.
Student Housing
The University of Arizona has a significant effect on the rental market in
the HMA and the area surrounding the campus in downtown Tucson. From fall
2013 through fall 2021, total enrollment rose by an average of 1,125 students,
or 2.5 percent, a year. Of the 42,100 students enrolled at UA during fall
2021 (excluding online students), approximately 7,100 of the 31,100 students
located at the main campus in the city of Tucson were housed in on-campus
dormitories. The remaining 24,000 students account for approximately
6 percent of renter households in the HMA. Since 2013, approximately 7,000
student-centered apartment units have been added to the HMA. The average
vacancy rate for apartment properties in the CoStar Group-defined University
North market area has generally declined every year since 2013, from a high
of 10.9 percent during the second quarter of 2013 to 5.9 percent during the
second quarter of 2019. During the period, the average rent increased $20, or
nearly 3 percent, annually, to $842 during the second quarter of 2019. During
the second quarter of 2020, however, vacancies in the University North
market area increased to 9.4 percent as the onset of the COVID-19 pandemic
affected occupancy levels. Rents declined to $837 by the second quarter of
2020 before rebounding rapidly to $900, reflecting an increase of nearly
8 percent, by the second quarter of 2021 as heightened net in-migration to
the HMA increased overall rental demand. The apartment vacancy rate in the
University North submarket was 8.0 percent during the second quarter of
2022, up slightly from 7.9 percent during the same period a year earlier, and
the average apartment rent increased an average of 14 percent to $1,024.
Military Housing
Davis-Monthan AFB has a smaller but noteworthy effect on the rental market
in the HMA, and particularly in the area surrounding the AFB. As of 2021,
approximately 6,150 active-duty personnel were stationed at the Davis-
Monthan AFB. On-base housing capacity includes the 775-bed Unaccompanied
Housing option; other AFB housing choices include three privately-operated
neighborhoods with 1,175 two-to-five-bedroom single-family and duplex homes.
In the CoStar Group-defined Southeast submarket immediately surrounding
the AFB, the overall apartment vacancy rate during the second quarter of 2022
was 6.4 percent, up from 4.9 percent during the second quarter of 2021, but
down from a high of 9.9 percent during the second quarter of 2013. Rents
in the submarket area rose an average of 5 percent a year from the second
quarter of 2013 to the second quarter of 2020. The average apartment asking
rent in the Southeast submarket area during the second quarter of 2022 was
$1,035, an 18-percent increase from the second quarter of 2021.
Rental Market 22Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Rental Construction
Rental construction activity in the Tucson HMA, as
measured by the number of rental units permitted,
has fluctuated since 2000. Approximately 1,450
rental units were permitted in 2000; subsequently,
construction activity fell at an average annual rate
of 21 percent to a low of 360 units permitted in
2006 (Figure 14). In response to declining vacancy
rates, rental construction increased to 640 units
during 2007. During 2008 through 2010, rental
construction activity averaged 280 units annually,
partly because of an increase in the average
apartment vacancy rate. From 2011 through
2014, rental construction activity averaged 970
units built annually as builders responded to
declines in the average apartment vacancy rate
and local economic growth. The slowdown in
job growth during 2014 and an increase in the
average apartment vacancy rate contributed to
a decrease in rental construction activity during
2015 through 2016, when an average of 120 units
were permitted annually. During 2017, rental
construction activity increased to a decade-high
of 1,575 units as builders responded to stronger
demand for apartments. From 2018 through
2020, construction activity declined an average
of 24 percent annually to reach 700 units in
2020, despite a continued decline in the vacancy
rate, before increasing to 1,150 units during
2021. During the 12 months ending July 2022,
rental construction activity in the HMA more than
doubled to an estimated 1,975 units compared
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
12 ME Jul 2021
12 ME Jul 2022
Rental Units Rental Units 12 ME
Figure 14. Annual Rental Permitting Activity in the Tucson HMA
12 ME = 12 months ending.
Note: Includes apartments and units intended for rental occupancy.
Sources: U.S. Census Bureau, Building Permits Survey; 2000–21—final data and estimates by the analyst; past 24 months of data—preliminary
data and estimates by the analyst
with a year earlier (preliminary data, with adjustments by the analyst). Record high rent growth and a
decline in the average apartment vacancy rate contributed to the increase in rental construction activity
during the past year.
New Rental Construction Activity
Among the 1,650 units currently underway are those at Cabana Bridges, an apartment community on the
south side of the city of Tucson within the 350-acre The Bridges mixed-use development. Construction
began on the 288-unit complex in November 2021, with completion anticipated in early 2023. Average
rents are expected to start at $1,000 for 468-square-foot studios, 624-square-foot one-bedroom units,
and 828-square-foot two-bedroom units. Recent developments in the HMA include Encantada Rita Ranch,
located southeast of Tucson in Rita Ranch. Encantada Rita Ranch was completed during 2021, and rents
for one-, two-, and three-bedroom units start at $1,621, $1,849, and $2,201, respectively. Among the
Rental Market 23Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
recently completed student apartments is the Mark, an eight-story apartment
community with 154 units, or 475 bedrooms, approximately 1 mile from UA in
the city of Tucson. The development opened in late 2019, with an option to
rent per unit or per bedroom. Per bedroom rents for one-, two-, three-, and
four-bedroom units start at $1,600, $1,120, $1,075, and $840, respectively.
Forecast
During the 3-year forecast period, demand is expected for an additional 3,775
rental units (Table 8). The 1,650 units currently under construction will meet the
demand during the first year and part of the demand during the second year of
the forecast period. Rental demand is expected to increase in the second and
third years of the forecast period in response to continued household growth
and as homeownership becomes increasingly more expensive.
Note: The forecast period is August 1, 2022, to August 1, 2025.
Source: Estimates by the analyst
Rental Units
Demand 3,775 Units
Under Construction 1,650 Units
Table 8. Demand for New Rental Units in the Tucson HMA
During the Forecast Period
Terminology Definitions and Notes 24Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Terminology Definitions and Notes
A. Definitions
Building Permits
Building permits do not necessarily reflect all residential building activity that occurs in an HMA. Some units are constructed or created without a
building permit or are issued a different type of building permit. For example, some units classified as commercial structures are not reflected in the
residential building permits. As a result, the analyst, through diligent fieldwork, makes an estimate of this additional construction activity. Some of
these estimates are included in the discussions of single-family and multifamily building permits.
Demand
The demand estimates in the analysis are not a forecast of building activity. They are the estimates of the total housing production needed to achieve
a balanced market at the end of the 3-year forecast period given conditions on the as-of date of the analysis, growth, losses, and excess vacancies.
The estimates do not account for units currently under construction or units in the development pipeline.
Distressed Sales Short sales and real estate owned (REO) sales.
Existing Home
Sales
Includes regular resales and REO sales.
Forecast Period 8/1/2022–8/1/2025—Estimates by the analyst.
Home Sales/
Home Sales
Prices
Includes single-family home, townhome, and condominium sales.
Net Natural
Change
Resident births minus resident deaths.
Terminology Definitions and Notes 25Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Rental Market/
Rental Vacancy
Rate
Includes apartments and other rental units such as single-family, multifamily, and mobile homes.
Seriously
Delinquent
Mortgages
Mortgages 90+ days delinquent or in foreclosure.
B. Notes on Geography
1.
The metropolitan statistical area definition noted in this report is based on the delineations established by the Office of Management and Budget (OMB)
in the OMB Bulletin dated April 10, 2018.
2. Urbanized areas are defined using the U.S. Census Bureau 2010 Census Urban and Rural Classification and the Urban Area Criteria.
C. Additional Notes
1.
The NAHB Housing Opportunity Index represents the share of homes sold in the HMA that would have been affordable to a family earning the local
median income, based on standard mortgage underwriting criteria.
2.
This analysis has been prepared for the assistance and guidance of HUD in its operations. The factual information, findings, and conclusions may
also be useful to builders, mortgagees, and others concerned with local housing market conditions and trends. The analysis does not purport to
make determinations regarding the acceptability of any mortgage insurance proposals that may be under consideration by the Department.
3.
The factual framework for this analysis follows the guidelines and methods developed by the Economic and Market Analysis Division within HUD.
The analysis and findings are as thorough and current as possible based on information available on the as-of date from local and national sources.
As such, findings or conclusions may be modified by subsequent developments. HUD expresses its appreciation to those industry sources and state
and local government officials who provided data and information on local economic and housing market conditions.
Terminology Definitions and Notes 26Tucson, Arizona Comprehensive Housing Market Analysis as of August 1, 2022
Comprehensive Housing Market Analysis Tucson, Arizona
U.S. Department of Housing and Urban Development, Office of Policy Development and Research
Contact Information
Cameron N. Ehrlich, Economist
Fort Worth, Texas HUD Regional Office
817–978–9417
D. Photo/Map Credits
Cover Photo Adobe Stock
