How First-Time Homebuyers Navigated Arizona’s Wild Housing Market Over the Last 5 Years

Arizona’s housing market turned into a rollercoaster between 2018 and 2023—and for first-time buyers, the ride was anything but smooth. Prices soared, bidding wars became the norm, and in many cities, finding an affordable starter home felt like chasing a mirage. Phoenix turned red-hot, Flagstaff priced out newcomers entirely, while Tucson and some rural pockets offered rare opportunities. As Millennials moved in and Gen Z dipped a toe into the market, state and local programs tried to ease the pressure. Behind the headlines, each region told its own story of hopes, hurdles, and hard-won homes.

Statewide First-Time Homebuyer Trends

Aerial view homes in Arizona — Shutterstock

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Soaring Home Prices and Affordability Crunch

Arizona’s housing market was hot from 2018 to 2022, pushing prices to record heights. The statewide median sale price roughly doubled over this span – rising from the mid-$200,000s in 2018 to around $430,000 by 2023. From just 2019 to 2023 alone, the median price jumped 57% to $423,400.

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This rapid appreciation far outpaced household income growth (median income rose only about 20% in that time), creating an affordability crunch for first-time buyers. Mortgage interest rates, which hit historic lows in 2020–21, began climbing in 2022 – adding to the challenge. By early 2023, rates were around 7%, up from ~3% at the start of 2022, drastically increasing monthly payments.

Shrinking Share of First-Time Buyers

Faced with these hurdles, fewer first-timers managed to buy. In 2022, only 24% of U.S. home purchases were made by first-time buyers, down from 32% a year before – the lowest share since recordkeeping began in 1981. Arizona mirrored this national trend: by 2023 many younger households had effectively “given up” on buying in the face of high costs.

The typical profile of those who did buy a first home skewed older and higher-income than in the past. The median age of first-time buyers hit 36–38 years old by 2022, significantly older than first-time buyers a decade prior. Many in this group were Millennials who had delayed homeownership into their 30s while saving up. Their median household income was around $97,000 by 2022, indicating that only those with higher earnings could break into the market.

Types of Homes Purchased

Despite the challenges, most first-time buyers still sought the traditional detached single-family home – the classic house with a yard. However, the price surge forced many to adjust their expectations. Instead of a new build or a large home, buyers settled for older or smaller houses or homes farther from city centers to stay on budget.

By 2022, finding any home under $300,000 in the Phoenix area had become extremely difficult, so entry-level buyers often had to choose between buying a fixer-upper or looking in smaller cities and exurbs.

Because of these pressures, alternative property types saw increased popularity among first-timers. Condos and townhomes became important options as they are usually cheaper than single-family houses in the same area. Many first-time buyers in Phoenix and Tucson who couldn’t afford a house “turned to condos,” especially in 2019–2021 when condo prices lagged behind the run-up in detached home prices.

Rise of Manufactured Homes

Another route to ownership was through manufactured homes (mobile homes). Arizona has many manufactured housing communities, and these homes cost significantly less per square foot (often about half the cost of site-built homes).

From 2018–2023, thousands of new manufactured homes were added in Arizona, providing an affordable path for those who might otherwise never buy. These homes were commonly bought by retirees on fixed incomes or by younger families who couldn’t afford a traditional house.

While a manufactured home (especially on leased land in a park) might be attainable for under $200K, the downside is they typically appreciate less and can be harder to finance. Even so, demand for manufactured homes was strong as other options slipped out of reach.

Buyer Behaviors – Upsizing, Downsizing, and Second Homes

Within the first-time buyer cohort, there were varied behaviors. Some “upsized” their plans – for example, in 2020–21, remote work led a number of families to jump directly into buying larger homes than they initially planned, seeking extra rooms for home offices or yards for kids.

On the other hand, some buyers took the opposite approach, downsizing their ambitions – purchasing smaller condos or cottages – if they were older first-time buyers or those on a tight budget, simply to get a foot in the door of homeownership.

There were also surprises: during the pandemic housing frenzy, a segment of Arizonans (generally upper-middle-income) even bought vacation homes or second properties while keeping their primary residence. Nationwide, vacation-home sales jumped 16.4% in 2020 as remote work and travel restrictions spurred interest in getaway properties.

Regional Variations Across Arizona

Different parts of Arizona saw very different housing market conditions from 2018 to 2023, which affected first-time buyers in those regions in unique ways.

Phoenix Metro Area

The Phoenix area dominated Arizona’s housing activity and epitomized the statewide boom. Phoenix’s economy and population grew rapidly in these years, fueling huge demand for homes. Prices in metro Phoenix skyrocketed – the median sale price hit about $475,000 by mid-2022, up from the mid-$200Ks in 2018.

This price level priced out many middle-income and first-time buyers from central Phoenix. As a result, buyers flowed into the suburbs and beyond. There was a pronounced shift outward: areas on the city’s edges (the West Valley communities, Pinal County to the south) became hot markets as families searched for any reasonably priced home they could find.

Phoenix also had one of the nation’s highest rates of investor activity during this time, which added competition for starter homes. By 2022, roughly 26% of residential properties in Greater Phoenix were owned by investors or used as seasonal vacation homes rather than occupied by local owners.

In terms of sales, investors at one point accounted for nearly a third of all home purchases – in the second quarter of 2022, about 31% of homes sold in Phoenix were bought by investors (one of the highest shares in the country). Many of these investors targeted the lower-priced single-family homes and entry-level condos, the very same homes first-time buyers wanted.

Despite these hurdles, Phoenix remained a top destination for newcomers (including many younger remote workers relocating from higher-priced states), which kept demand strong.

Tucson Metro

Tucson, Arizona’s second-largest city, saw a more moderate housing trend in this period, which in some ways benefited first-time buyers. Home prices did rise in Tucson, but less dramatically than Phoenix’s. The average home value in Tucson was about $327,000 in 2023, nearly $100K lower than Phoenix.

Tucson’s slower economic growth and population growth kept its housing market a bit cooler – there were fewer bidding wars, and investors were less prevalent. This meant relative accessibility for local first-time buyers.

That said, Tucson was not immune to the pandemic-era surge. By 2023, only about 38% of homes in Tucson were affordable to a median-income family, down from 64% in 2012. (For Phoenix, that number was even lower – roughly 22% by late 2022.)

While Tucson remained comparatively more affordable, many locals still struggled with the higher prices. The difference was that in Tucson, buyers typically did not have to move as far out to find something within budget.

Flagstaff, Prescott, and Northern Arizona

Smaller housing markets in northern Arizona presented a very different picture – often more challenging for first-time buyers due to unique local factors. Flagstaff, in particular, is a high-cost mountain town. By 2023, Flagstaff’s median home prices were hovering around $600K–$700K.

For local first-time buyers in Flagstaff, the situation was daunting – very few could afford to buy. Most young adults and working families ended up continuing to rent or choosing to move to lower-cost towns instead.

Nearby Prescott also saw significant price increases. Prescott became a popular spot for retirees and remote workers during 2020–2021, which pushed prices up sharply. Many of those moderate-income residents turned to alternatives – for instance, buying manufactured homes on the outskirts or even relocating down to the Phoenix outskirts where larger developments meant more supply.

Rural Areas

In rural parts of Arizona – places away from the major cities – home prices generally remained much lower, which on paper would seem great for first-time buyers. In counties like Mohave, Cochise, or parts of Pinal far from Phoenix, you could find small single-family homes or manufactured homes often under $200K or $250K.

However, these areas have lower inventory and fewer sales overall, so choices were limited. Also, rural economies are smaller – income levels are lower and job growth slower – so even low prices can be a stretch for locals.

Some rural communities with scenic or recreational appeal experienced their own mini-booms as people bought second homes or pandemic retreats there. That could suddenly drive up prices in a normally quiet small town, surprising the local first-time buyers.

First-Time Homebuyer Assistance Programs

Given the steep hurdles of down payments and rising prices, many Arizonans turned to homebuyer assistance programs to make their first purchase possible. The primary statewide program is the Arizona Industrial Development Authority’s “HOME Plus” down payment assistance program, which offers eligible buyers a 30-year fixed mortgage with down payment and closing cost assistance.

By 2019, over 500 Arizona home buyers per month were using the HOME Plus program to help finance their purchase. Under HOME Plus, qualifying buyers receive an assistance grant that averages around $8,300 per buyer, which can be applied to the down payment or closing costs.

This program expanded over the 2018–2023 period to keep up with market conditions. For example, the maximum income limit for HOME Plus was raised to $122,100 in 2022 to accommodate higher-earning buyers who still needed help affording Arizona’s pricier homes.

Beyond HOME Plus, Arizona also offered Mortgage Credit Certificates (MCCs) through the state housing finance agencies, which provide a federal tax credit on mortgage interest for first-time buyers. Various cities and counties had their own initiatives too. For instance, the City of Phoenix and Tucson each periodically offered down payment assistance or forgivable loan programs for lower-income first-time buyers.

Millennial vs. Gen Z Homebuyers

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Generational shifts were evident in Arizona’s first-time homebuying from 2018 to 2023. The bulk of first-time buyers in this period were Millennials, the generation born roughly 1981–1996 who entered their late 20s to late 30s during these years.

Many Millennials in Arizona had delayed buying a home after coming of age during the Great Recession, but by the late 2010s and early 2020s they were in a position (and felt a urgency) to purchase their first house. In fact, 2018–2023 saw many Millennials finally moving from renting to owning after years of rebuilding finances and saving down payments.

However, affordability challenges hit Millennials hard. By 2022, a notable shift occurred: across the U.S., Baby Boomers actually overtook Millennials in share of home purchases, largely because younger buyers pulled back due to high prices and interest rates. NAR data show that in 2022, Boomers made 39% of home purchases, while Millennials fell to 28%, a reversal of the trend just a year earlier. In 2021, Millennials had been leading at 43% of purchases.

Meanwhile, the oldest members of Gen Z (born roughly 1997–2012) began to enter their 20s during this period, and a small but growing number of Gen Z buyers stepped into the market by 2020–2023. This cohort is still very young – the oldest Gen Z were mid-20s by 2023 – so they’re just at the start of the homeownership journey.

By 2022–2023, there were signs of Gen Z growing their footprint in the entry-level market. One Phoenix-area builder reported that from 2022 to 2023 the number of Gen Z buyers in their new-home communities doubled. This was partly because some Gen Z graduates with good jobs decided to jump into homeownership quickly, especially as rents surged.

Buying vs. Renting in 2018–2023

In Arizona from 2018 to 2023, renting and buying both became more expensive, creating a squeeze on housing costs no matter which path people took. In the early 2010s, renting was relatively cheap and homeownership was a stretch for many – but by the early 2020s, renting itself had become so costly that it provided little relief.

Arizona saw some of the fastest rent growth in the nation during this period. In metro Phoenix, rents soared – by one estimate, the area’s rents increased almost 80% between 2016 and 2021. A significant portion of that jump happened in 2021: Phoenix rents were up around 22–29% year-over-year in 2021 alone.

By 2022, nearly half of all Arizona renters were “cost-burdened,” meaning they paid more than 30% of their income on housing – the highest rate of rent burden in Arizona since at least 2010. About a quarter of renters were spending over 50% of income on rent (classified as severely cost-burdened).

As a result of these trends, many households found themselves in a bind – neither renting nor buying was easily affordable by 2022. The logic was: if you can scrape together the down payment (perhaps with assistance), buying a home fixes your mortgage payment (if it’s a fixed-rate loan), whereas rent could go up another 10% next year. Indeed, the frenzy of 2021–2022 saw many renters turn into frantic buyers, adding pressure to the starter home market.

One report noted that the typical mortgage payment in Arizona roughly doubled between 2019 and 2023, when accounting for price increases and interest rate hikes. This meant that by 2023, neither option was easy: renting was very costly, but the monthly payment to buy the median home was also out of reach for many.

Comparing 2018–2023 to 2008–2017

housing supply and demand — Shutterstock

How do the recent trends compare to the prior decade? The differences are striking – almost a mirror opposite scenario in some respects.

Market Conditions

The 2008–2017 period in Arizona housing was defined first by a major crash and recession, then a slow recovery. In contrast, 2018–2023 was defined by a boom (and short cooldown) with record high prices.

In the late 2000s and early 2010s, Arizona experienced a housing bust. After the 2008 financial crisis, home prices plunged, foreclosures flooded the market, and by 2011–2012 home prices hit multi-year lows. There were bargains everywhere for those who had the means to buy.

In 2018–2023, this was a seller’s market like none other. Home prices hit record highs year after year up to 2022. Instead of foreclosures, buyers faced bidding wars. Inventory of homes for sale was at record lows.

Essentially, the earlier decade offered better affordability but harder financing, whereas the recent period offered easier financing but worse affordability. In 2010, the main problem was convincing lenders to give you a loan and overcoming fear of a declining market – but prices were cheap. In 2020, the main problem was finding any house you could afford and beating out other buyers – but loans were relatively easy to get and interest rates were historically low.

First-Time Buyer Activity

After the crash, many Arizona families were bruised – some had lost homes to foreclosure, others saw their credit wrecked or were skittish about buying. Early in the 2008–2017 period, first-time buyer numbers were low because people were cautious and lending standards were very tight.

But as we got into 2012–2015, first-timers came back in larger numbers, lured by low prices and improved economy. The average age of first-time buyers back then was lower (late 20s to early 30s) since housing was more affordable relative to income.

In 2018–2023, first-time buyers initially were active (2018-2019 saw decent numbers) but by the end of the period their presence shrank to record lows. Those who did buy in 2018–2021 had to stretch more (taking on higher debt-to-income ratios, using creative financing, etc.), whereas those in 2008–2012 who could buy often kept their housing costs fairly low due to the cheap prices.

Housing Supply and Demand

Another key difference: housing supply. From 2008–2014, Arizona had an oversupply of homes (leftover from overbuilding in the bubble), whereas by 2018–2023 it had a housing shortage (due to under-building in the 2010s and rapid population growth).

Arizona’s population grew ~12% from 2010 to 2020, but housing units grew only ~7% in that time. By the early 2020s, the state was tens of thousands of units short of what was needed. This structural shortage is a big reason 2018–2023 looked so different – there were simply not enough homes to go around.

Long-Term Impact

Those who bought in the earlier decade (especially around 2012-2015) often saw their housing costs remain modest and they rode a wave of home equity growth. Those who bought in 2018–2021 also have seen strong equity gains because of the huge appreciation.

However, those who missed buying in 2012 could still buy in 2018 albeit at a higher price; while those who missed buying in 2018 found themselves in 2023 facing a much tougher market. The long-term effect is that the cohort of people who became homeowners in the 2010s are generally sitting pretty by 2023, whereas the cohort that was still renting by the 2020s is worse off than the renters of a decade earlier (because now prices are higher, rents are higher, and the wealth gap between renters and owners widened).

Conclusion

In summary, 2018–2023 versus 2008–2017 in Arizona were night-and-day for first-time homebuyers. During the earlier decade the main obstacle for young buyers was recovering from the recession – things like credit issues, saving up, and overcoming fear – but affordability was actually favorable by the mid-2010s.

In the recent period, the obstacle shifted to affordability and lack of supply, even though financing was readily available. Or simply: back then it was hard to get a loan but easy to find a cheap house; now it’s easy to get a loan (for qualified buyers) but hard to find an affordable house.

Those who could buy in either era have benefited significantly, but the door to entry has been getting narrower. It highlights why there’s such a focus today on building more affordable homes and supporting first-time buyers, so that the rising generation isn’t locked out in the way many feared they would be in the recent boom.