Arizona’s real estate landscape saw a dramatic transformation from 2018 to 2023. Booming metro areas like Phoenix and Tucson drew waves of new residents, pushing prices sky-high and fueling fierce bidding wars. But outside the cities, a quieter shift was underway—rural areas saw renewed interest, often from buyers seeking space, affordability, or a change of pace post-pandemic. The result was a housing market moving in two directions at once, shaped by lifestyle changes, remote work, and rising costs. Whether flocking to city condos or desert escapes, Arizonans redefined what—and where—home means.
Arizona’s Housing Market Rollercoaster
Between 2018 and 2023, Arizona’s housing market turned into a rollercoaster. Demand for homes climbed rapidly, pushing prices nearly double what they were five years prior. In 2018, a “typical” Arizona home sold in the mid-$200,000s range, but by 2023 the median sale price had ballooned to around $430,000. This swift appreciation far outpaced income growth (median household incomes rose only about 20% in that span), creating an affordability crunch for many locals.
Part of the frenzy was fueled by historic low mortgage rates during 2020–2021. Thirty-year mortgage rates dipped to around 3%, which supercharged buyers’ purchasing power. However, this climate changed abruptly after 2021. By early 2023, rates had spiked to roughly 7%, making monthly payments much higher and cooling the buying spree. Through it all, Arizona’s population kept growing (top-5 in the nation most years), adding new demand for housing even as affordability worsened.
Property Types and Buyer Preferences
Single-family houses remained the top choice for most Arizona homebuyers in both city and country. The classic detached home with a yard is still the goal for many families. But as prices soared, more buyers had to adjust their expectations. In metro Phoenix by 2022, finding any single-family house under $300,000 became extremely difficult.
This pushed budget-conscious buyers to consider alternative property types. Condos and townhomes grew in popularity as a more affordable step into homeownership. In Phoenix and Tucson, many buyers who were priced out of houses “turned to condos” during 2019–2021, since condo prices initially lagged behind the run-up in single-family home prices.
By 2022, condos were sometimes the only option under $250,000 in the hottest markets. For example, in Phoenix the entry-level price for a single-family home had pushed above $350,000, so a $250K condo became the fallback for buyers with tighter budgets. These attached homes come with HOA fees, but overall monthly costs often remained manageable for moderate-income households.
Meanwhile, newly built homes were in high demand too. Builders in Phoenix’s outskirts and in smaller cities sold many new houses to meet the influx of buyers. Interestingly, the average size of new houses increased during these years, reversing a late-2010s dip, as buyers (especially at the high end) sought more space.
Size Matters: Upsizing, Downsizing, and Second Homes
Buyer choices about home size varied by life stage and pandemic impacts. Many younger families and professionals used the 2018–2021 boom as a chance to upsize. With low interest rates making larger mortgages more affordable, some buyers leapt from a starter condo to a single-family house or from a smaller house to a larger one with an extra room or two.
The COVID-19 period in particular made people crave extra space – for a home office, a gym, or simply a bigger backyard to enjoy while stuck at home. High-earning remote workers often upsized to properties with dedicated office spaces and even luxury amenities (like home gyms or pools), seeking a comfortable stay-at-home lifestyle.
On the other hand, some homeowners – especially empty-nesters and retirees – looked to downsize during these years. Many baby boomers chose to sell and move to a smaller home or condo that was easier to maintain. In Arizona, popular retirement areas like Scottsdale, Prescott, or Green Valley attracted downsizing seniors looking for a more relaxed lifestyle.
However, the red-hot market actually caused some older owners to delay downsizing – they worried that if they sold, they might struggle to find an affordable smaller home in the same frenzied market. During the pandemic, health concerns also made some seniors stay put rather than tour new homes.
The Rise of Second Homes
A notable development in this period was the rise in second-home buying. Thanks to low mortgage rates and remote work flexibility, more Arizonans (and newcomers from out of state) purchased vacation homes or weekend getaways. Some middle-class and upper-middle-class households took advantage of cheap financing to afford a second property, such as a cabin in the mountains or a condo in a resort town.
In many cases, they kept their primary residence and used the second home for recreation or as a remote work location part of the time. This blurred the line between “primary” and “secondary” residence for certain buyers during the pandemic. In addition, some saw second homes as an investment opportunity – planning to rent them out on Airbnb or VRBO when not using them personally.
By late 2022 and 2023, upsizing grew harder as costs rose, and the second-home wave started to recede. Still, the legacy of this period is that many Arizona homeowners either traded up to larger homes or added a second home, while a number of long-time owners downsized to smaller quarters.
The COVID-19 Effect on Buyer Behavior
The COVID-19 pandemic (2020–2021) had an enormous impact on homebuying behavior in Arizona’s urban and rural areas. When the pandemic hit, workplaces and schools shut down, and suddenly home became the center of people’s lives. This spurred many to rethink where and how they wanted to live.
Remote Work and Migration
With jobs going remote, thousands of people realized they were no longer tied to offices in big cities. Professionals from high-cost, dense cities like Los Angeles, Seattle, or even New York began looking at Arizona as an attractive place to live. The state offered more house for the money, good weather, and plenty of room to spread out.
Phoenix, in particular, saw an influx of remote workers relocating from pricier states, which kept demand strong even when local buyers struggled.
Urban to Suburban Shift
Within Arizona, there was a noticeable movement of buyers from the urban core to the suburbs and exurbs. Big city amenities became less important when restaurants and events were closed, and having a larger home gained priority. By early 2022, every one of Zillow’s top 10 hottest U.S. housing markets was a suburb about 30 minutes outside a major city, and Arizona reflected this pattern.
In metro Phoenix, families seeking affordability flocked to the outskirts – areas like the West Valley (e.g. Buckeye, Goodyear) and southern Pinal County – in search of reasonably priced homes. These fringe communities boomed as people left the dense city for more space. Tucson’s suburbs saw a similar trend, though on a smaller scale. Essentially, COVID accelerated the “drive until you qualify” mindset, where buyers were willing to live farther out to get a home they could afford and enjoy.
Desire for Space
The pandemic also changed what buyers looked for in a home. With everyone at home 24/7, features like an extra bedroom/office, a backyard, or a home gym jumped up the priority list. Condo living in a high-rise or a small starter home in the city became less appealing to some, compared to a roomy house in a less crowded area.
This partly explains why detached homes rose in demand relative to condos in 2020 – people wanted privacy and space (and maybe a pool to escape the summer heat). However, once vaccines rolled out and life gradually normalized, urban living began to regain appeal for some. By 2022–2023, young professionals and downsizers started returning attention to condos and townhomes in city centers.
Surging Home Prices and Rising Mortgage Rates
One of the most striking trends from 2018 to 2023 was the surge in home prices across Arizona. Almost every corner of the state saw significant appreciation, though the spikes were sharpest in and around the big cities. As noted earlier, the statewide median sale price roughly doubled in five years.
Metro Phoenix epitomized this boom: the median home price in the Phoenix area hit about $475,000 by mid-2022, up from the mid-$200,000s in 2018. That kind of increase – roughly an $200K+ jump – put Phoenix among the fastest-growing markets in the nation. Tucson, the second-largest city, also saw prices climb, though less dramatically. Tucson’s average home value was around $327,000 in 2023, nearly $100K lower than Phoenix’s at the time.
Smaller cities and towns weren’t exempt: places like Flagstaff and Prescott (northern Arizona) had huge price gains due to their desirability. By 2023, Flagstaff’s median home price hovered in the $600,000–$700,000 range, making it one of the priciest markets in the state.
Supply and Demand Imbalance
Driving these price increases was a classic case of high demand and limited supply. Arizona had been under-building homes in the early 2010s following the last housing crash, so by the late 2010s, housing supply was tight. When the wave of buyers hit (fueled by population growth and pandemic moves), there simply weren’t enough homes listed for sale.
Buyers often had to bid above asking prices or make cash offers to win a house. Even appraisals struggled to keep up with the rapidly rising values. The result was year after year of double-digit percentage price growth in 2020 and 2021. For example, in 2023 the state’s median home price was still about 55% higher than at the end of 2019, despite a slight market cooldown.
The Interest Rate Swing
At the same time, mortgage rates swung wildly. In 2018, rates were around 4–5%, which was historically normal. But the Federal Reserve’s actions during the pandemic pushed rates down dramatically. By late 2020 and into 2021, you could get a 30-year home loan for near 3% interest, an almost unheard-of low.
These low rates were like pouring fuel on the housing fire – they reduced monthly payments, allowing buyers to stretch for higher-priced homes. However, in 2022 the script flipped. Inflation surged and the Fed began hiking rates, which drove mortgage rates up quickly. By late 2022, typical 30-year rates were about 6–7%, more than double what they had been a year earlier.
This had a chilling effect: higher rates added hundreds of dollars to monthly mortgage payments, pricing some buyers out and causing others to hit pause on their searches. In effect, the affordability boost of low rates was gone, just as home prices were peaking.
Affordability: City vs. Small Town
Affordability – the ability for a typical family to purchase a home – shifted dramatically from 2018 to 2023, and the picture varied between Arizona’s urban centers and its rural communities. Generally, small towns and rural areas remained more affordable than the big cities, but they faced their own challenges.
In Arizona’s largest metro, Phoenix, the affordability situation became especially severe by the end of this period. Only around 1 in 4 to 1 in 5 homes on the Phoenix market were affordable to a median-income family by 2022. By late 2022, it was estimated that just ~22% of homes for sale in Phoenix were affordable to median earners – a stunningly low share.
Tucson fared a bit better but also saw affordability drop. In Tucson about 38% of homes were affordable to a median family in 2023, down from 64% a decade earlier. So even in Tucson, where home prices are lower, the rapid rise in prices eroded the advantage that local incomes had.
Rural Affordability Challenges
Rural areas and smaller towns started off much more affordable – some tiny communities in Arizona historically had median home prices under $100,000. In 2018, an Arizona Department of Housing report noted that “small rural communities were the most affordable” in the state. That basic gap remained true through 2023: you could generally get more home for your money in a rural county than in Phoenix or Tucson.
For example, in counties like Mohave or Cochise, one could find modest single-family homes or manufactured homes for under $200,000 even during the boom years. However, local buyers in those areas often didn’t feel rich. Rural economies tend to have lower wages and fewer jobs, so even a $200K home can be a stretch for a family earning a modest income in those counties.
Also, the inventory of homes for sale is thin in many rural towns. There might only be a handful of houses on the market at any given time, which limits choice. So while the prices in rural Arizona looked low on paper, the reality is that housing still wasn’t easily accessible for all local residents.
Resort Towns and Unexpected Hotspots
Interestingly, some rural and exurban areas saw affordability worsen because they became surprise hot spots. If an area had desirable scenery or was a known vacation locale, the pandemic homebuying wave could send its prices spiking suddenly.
Places like Sedona, Prescott, or lakeside and mountain towns (e.g. Pinetop or Lake Havasu City) experienced mini-booms as outsiders bought second homes or relocated there for a quieter life. This drove up prices in communities that typically had been sleepy. Local first-time buyers in those towns found themselves squeezed out by the rapid price jumps.
For instance, Prescott (Yavapai County), while smaller than Phoenix, saw a big influx of retirees and remote workers around 2020–2021, pushing the median price sharply upward. That made it harder for the local workforce (teachers, police, service workers, etc.) to afford homes in their own city.
Who’s Buying Homes? Demographics of Buyers
The profile of Arizona homebuyers evolved during 2018–2023, reflecting both the aging of generations and the market’s challenges. A few key demographic trends emerged:
Age and Income Shifts
Buyers got older on average. With housing costs so high, younger adults struggled to break into the market. Many Millennials (born 1981–1996) who were in their 20s and 30s during this period found it difficult to save enough for a down payment and monthly payments.
Nationwide, the median age of first-time homebuyers rose to around 36–38 years old by 2022, significantly older than first-time buyers a decade ago. Arizona mirrored this trend. By the early 2020s, a lot of first-time buyers were no longer twenty-somethings fresh out of college; they were more often in their 30s, having spent years saving or waiting for the right moment.
Meanwhile, older buyers (Boomers and Gen X) took a larger share of purchases. In 2022, for the first time in recent memory, Baby Boomers (late 50s to 70s) overtook Millennials as the biggest group of home purchasers nationally. Boomers made 39% of home purchases in 2022, while Millennials fell to 28%.
The buyers who succeeded in this market tended to have higher incomes or significant assets. The median household income of first-time buyers by 2022 was around $97,000, well above the overall median income in Arizona. In fact, a study estimated a household needs to earn roughly $109,500 per year to afford the average Arizona home at 2024 prices with a standard mortgage.
Family Situations and First-Time Buyers
Most homebuyers were married couples, as combining incomes made it easier to afford a purchase. National data shows about 60-70% of recent homebuyers are married pairs, and this held true in Arizona. Single buyers (especially single parents) had a tough time because one income often couldn’t keep up with prices.
One notable trend was a rise in multi-generational buying – some families pooled resources with parents or adult children to buy a home together. For example, a Gen X couple might buy a larger house that also accommodates an elderly parent, or vice versa, so that multiple generations live under one roof.
The share of first-time homebuyers dropped to record lows during this period. Nationally, only about 26% of home purchases in 2022 were by first-timers (down from around 34% historically) – the lowest since the stat has been tracked. Many young households effectively “gave up” on buying, at least temporarily.
The Rise of Investor Buyers
A unique category of buyer is those who are not buying for personal residence at all, but as an investment. Arizona saw a surge in investor activity during the housing boom. In Phoenix, investors were extraordinarily present: at one point in 2022, nearly 1 in 3 home sales (31%) in Phoenix were to investors.
This was one of the highest rates in the country. A significant portion of homes, especially lower-priced houses and starter homes, were snapped up by investors who either flipped them or turned them into rentals. By 2022 an estimated 26% of all residential properties in Greater Phoenix were owned by investors or used as seasonal/vacation homes, not occupied by local owners.
Vacation and Investment Home Trends
Amid the homebuying frenzy, vacation homes and investment properties played a notable role in Arizona’s market. Both urban and resort areas saw an uptick in purchases that were not intended as primary residences.
The pandemic period triggered a boom in second-home purchases nationwide, and Arizona was part of this trend. With remote work allowing more flexibility, many people decided to buy a vacation home where they could also spend extended time working remotely.
Popular spots for Arizona second homes included mountain towns like Flagstaff or Pinetop, desert lake communities like Lake Havasu City, and even smaller cities like Tucson (for Phoenix residents wanting a cooler getaway). Nationally, purchases of second homes were about 37% higher in 2020 and 2021 compared to pre-pandemic levels.
Some Arizona vacation markets experienced almost a feeding frenzy. For example, Lake Havasu City (a boating and recreation haven) saw home sales volumes soar during the pandemic – up nearly 79% from 2019 levels by early 2023, driven by out-of-town buyers.
However, by 2023 this trend cooled off considerably. As travel normalized and mortgage rates rose (making second home mortgages more expensive and even subject to extra fees), the appetite for second homes waned. Vacation home sales nationally had fallen by nearly three-quarters from their pandemic peak by late 2023.
How 2018–2023 Compares to 2008–2017
The 2008–2012 period was a time of housing market distress in Arizona. The state had been ground zero for the mid-2000s housing bubble and subsequent crash. Home prices peaked around 2006–2007 and then plummeted when the bubble burst. Arizona’s housing market was among the hardest hit in the nation during the Great Recession – prices fell by 40-50% in some areas, and foreclosures were widespread.
From 2012 to 2017, the market gradually recovered. Prices crept back up from their lows, but very slowly at first. By around 2016–2017, Arizona home prices had finally regained or exceeded their mid-2000s peak in many places, marking a full recovery.
In contrast, 2018–2023 was a period of rapid expansion and exuberance (at least until late 2022). Instead of distress, we saw soaring prices and even signs of FOMO (fear of missing out) among buyers rushing to purchase before prices went higher. The pandemic added an unexpected catalyst that the earlier decade did not have.
After 2008, buyers and banks were wary. People were trying to rebuild credit, and many Millennials delayed buying because they graduated into a tough economy. By the mid-2010s, confidence slowly returned. But many who bought in 2008–2017 were quite conservative in what they purchased, often smaller homes that fit their budget.
Jump to 2018–2023, especially during the pandemic, and buyer psychology shifted to more of a “seize the moment” mindset among those who could afford it. Low interest rates made monthly payments manageable even on more expensive homes, so some buyers stretched for bigger or more premium houses.
In 2008–2017, some trends actually went in the opposite direction to recent ones. During the housing bust, far-out suburbs and rural fringe areas suffered the most. By contrast, in 2020–2021 we saw a partial reversal, with suburban and exurban growth exploding as described, due to remote work and desire for space.
In summary, the 2008–2017 period was one of recovery and rebuilding trust in the housing market, with relatively subdued activity until the later years. The 2018–2023 period was an aggressive expansion, with rapidly rising prices, new kinds of demand (remote workers, etc.), and buyers both fueled by opportunity and forced to adapt to challenges (like low supply and high prices).
References
- US second home sales slide in pandemic-era vacation hot spots – Reuters
- Housing Affordability in Arizona Quarter 4 2024 Update – Common Sense Institute Arizona
- Census shows Arizona’s biggest city grew as some rural counties shrank – Arizona Public Media (AZPM)
- Home Buyers and Sellers Generational Trends – 2023 Report – National Association of REALTORS® (NAR)
- Arizona Real Estate Market Overview – 2025 – Steadily (Landlord Insurance Blog)
