High-earning households (with annual incomes over $500,000) have had a notable impact on Arizona’s housing market from 2018 through 2023. This period saw significant shifts in where affluent buyers are choosing to live, the kinds of homes and features they demand, and the motivations driving their purchase decisions. Below, we break down key trends and compare them to patterns from the prior decade (2008–2017) where relevant.
Urban vs. Suburban Shifts Among Affluent Buyers
Affluent homebuyers in recent years increasingly favored Arizona’s suburban areas over city centers. By early 2022, every one of Zillow’s top 10 hottest U.S. markets was a suburb about a half-hour outside a major city, and home values in those suburbs were rising faster than in the core cities.
Remote work has been a key driver of this shift, enabling high earners to prioritize space and affordability over commute times. This marks a reversal from the early 2010s, when urban neighborhoods had begun attracting more investment and some high-income residents.
Phoenix Metro Patterns
In Arizona, high-income buyers gravitated toward communities like Scottsdale, Paradise Valley, and Gilbert rather than Phoenix’s downtown.
Even within the Phoenix city limits, many upscale neighborhoods offer a suburban feel – a continuation of Phoenix’s sprawling development pattern.
The COVID-19 pandemic accelerated this movement: as telework became widespread, wealthier families sought larger properties on the outskirts, while downtown high-rise living lost some luster.
Beyond the Valley
Phoenix’s suburbs saw a surge in demand in 2020–2021 that outpaced historical norms, whereas a decade prior the distinction between urban and suburban growth was less pronounced.
Outside of Phoenix, smaller cities and towns also benefited – for example, Prescott and Sedona drew interest as spacious retreats, a trend less common in the wake of the 2008 recession.
Bigger Homes and New “Must-Have” Features
With more income and newfound flexibility, $500K+ earners have been buying bigger homes and insisting on high-end features. Many are upsizing to properties with extra rooms and square footage to accommodate home offices, gyms, and entertainment spaces.
Wellness and Home Entertainment
Post-2020, features that cater to at-home living and wellness became especially prominent. Home offices moved from a luxury to a necessity for remote-working professionals.
Amenities like dedicated fitness and spa facilities have seen a boom. “We are seeing a lot of red light saunas, cold plunge pools and in-home gyms,” said one Paradise Valley luxury realtor, noting that home theaters have also made a huge comeback post-COVID.
Affluent buyers are essentially seeking to re-create resort-like experiences in their residences, a shift from the prior decade when such ultra-luxury extras were less ubiquitous (and when open-plan layouts and outdoor living spaces were the big trends).
Technology and Space
Smart-home technology and energy-efficient design have also become expected in this price tier. Builders and buyers are installing advanced home automation (for security, climate control, lighting, etc.) far more than they did in the early 2010s.
Space is a priority: luxury homes in Arizona often boast expansive great rooms, multiple guest suites, and ample outdoor living areas (from gourmet kitchens to infinity pools).
During 2018–2023, the average newly built house in the U.S. actually increased in size after a brief dip in the late 2010s – a trend driven largely by the upper end of the market. High-income Arizonans epitomize this, often seeking estates with larger lots and scenic views.
In Paradise Valley, for instance, out-of-state buyers frequently compete for homes with panoramic mountain vistas, highlighting how features like location and privacy remain as valued as any high-tech gadgetry inside the home.
Motivations Behind Purchasing Decisions
Several motivations have spurred wealthy buyers to put down roots in Arizona during this period.
Lifestyle and Space
A major lure is the lifestyle and space the state offers. Transplants from more expensive, dense cities are drawn to Arizona’s promise of “more house for their money” and a relaxed, sun-soaked way of life.
In contrast to 2008–2017 – when many buyers were recovering from the housing crash and were relatively cautious – the late 2010s and early 2020s saw confident high-income purchasers driven by lifestyle preferences.
Warm weather and year-round outdoor recreation are a big pull for those relocating from colder climates. As one report noted, many asked themselves during the pandemic, “Why live in a dense, cold metropolis when you can feel like you’re on vacation all the time?” This mindset shift led numerous wealthy families to trade crowded coastal cities for Arizona’s wide-open living.
Remote Work Opportunities
The work-from-anywhere revolution amplified these lifestyle motivations. By 2020, many executives and professionals realized they no longer needed to be tied to offices in New York, Chicago, or San Francisco.
Arizona became a prime beneficiary of this, offering an appealing quality of life without sacrificing connectivity. High earners with remote jobs or businesses seized the opportunity to purchase larger homes with dedicated work spaces, something much more feasible in Arizona than in, say, Silicon Valley’s expensive market.
Tax and Financial Advantages
Another strong motivation is Arizona’s tax and financial advantages. The state has relatively moderate income taxes and low property tax rates, with no estate tax – factors that gained prominence after the 2017 federal tax reform.
When the SALT deduction (state and local tax write-off) was capped in 2018, it effectively increased net taxes on affluent residents of high-tax states. This “sparked a tax migration that rewarded pro-growth states” like Arizona.
In other words, some wealthy individuals have chosen to buy homes (and even change residency) in Arizona to reduce their tax burden. Realtors report that lower taxes, bigger homes, and larger lots are huge draws for their clients.
Investment and Second Home Opportunities
Many newcomers are also buying second homes or investment properties in Arizona, attracted by the state’s growth prospects.
In fact, some high-income buyers during this period were not relocating full-time but purchasing vacation homes or rental properties (especially in resort areas), betting on Arizona’s rising home values.
Quality of Life Considerations
Finally, old-fashioned quality of life and family considerations play a role. Top earners often cite Arizona’s excellent golf courses, spas, and outdoor amenities, as well as good private schools and a family-friendly environment, as reasons for moving.
During 2018–2023 – a time of robust stock market gains (until 2022) – many felt financially secure enough to act on these life-enriching goals. This is a contrast to the late 2000s, when even wealthy households were more hesitant to make big real estate moves amid economic uncertainty.
By the 2020s, high-income buyers were far more willing to engage in bidding wars to secure their “dream” home in Arizona’s desirable neighborhoods.
The Economic Landscape: Rates, Prices, and Policies
Economic factors have both enabled and tempered the homebuying activities of high-income households in recent years.
The Interest Rate Roller Coaster
In the late 2010s, low mortgage rates made it an opportune time to buy upscale homes. Rates hovered near historic lows for much of 2018–2021, dropping below 3% for 30-year loans at one point in 2020.
These cheap financing conditions significantly boosted the purchasing power of affluent buyers, allowing some to upgrade to even more expensive properties or purchase additional homes. Several buyers in 2020–2021 refinanced or took advantage of the low rates to lock in multimillion-dollar purchases.
In effect, monetary policy in that period helped fuel luxury market activity (much as it did for the broader market).
Market Cooling and Rate Hikes
However, by 2022 the environment changed sharply. Inflation surged and the Federal Reserve’s rate hikes drove mortgage rates past 6%–7%, the highest in over a decade. This cooled the overall housing market and even the wealthy felt some impact.
High-end home sales fell off markedly in late 2022 as borrowing costs spiked and financial markets became volatile. In fact, by early 2023 the number of luxury homes sold had plunged nearly 45% year-over-year – a record drop, far steeper than the decline in mainstream home sales.
Affluent buyers, who had led the charge in the pandemic housing frenzy, pulled back amid “sticker shock” from both higher interest payments and economic uncertainty. Many wealthy households saw their stock portfolios decline in 2022, which also made them more cautious on real estate investments.
This pullback is a stark contrast to the post-recession recovery years (2012–2017), when luxury sales grew steadily each year. It illustrates how sensitive even high-end segments can be to financial conditions – though wealthy buyers are more insulated than most, they are not entirely immune to market downturns.
Price Growth Despite Challenges
Despite rising rates, Arizona’s home prices soared during most of 2018–2023, especially in the luxury tier. Strong demand (fueled by migration and limited supply of high-end homes) pushed prices upward at a pace far above that of the previous decade.
By late 2021, Phoenix was regularly seeing double-digit annual price gains. Statewide, median and luxury price levels in 2022 exceeded the peaks of the mid-2000s housing boom. Even as the market cooled in 2023, prices at the top end remained high.
Nationally, the typical luxury home sold for a record $1.17 million in Q4 2023, up 8.8% year-over-year. In Arizona’s prime areas the figures were even more striking – for instance, the Phoenix metro’s luxury home values were roughly 30–40% higher than five years prior, far outpacing the price growth seen from 2008 to 2013 when the market was recovering from a crash.
Cash Transactions Increase
One reason prices held firm is that many affluent buyers simply avoided mortgages altogether. Wealthy purchasers are often cash-rich, and in recent years they increasingly paid cash to win deals and bypass high interest rates.
Nearly half (46.5%) of luxury home purchases in late 2023 were all-cash, a record-high share. This ability to deploy cash has rendered mortgage rate spikes “irrelevant” for a large segment of high-end buyers – a dynamic quite different from middle-class buyers who are very rate-sensitive.
Consequently, even as the broader market slowed, competition remained stiff for the most coveted luxury listings. “A lot of luxury buyers are coming in with cash, snapping up expensive homes,” observed a Phoenix-based agent, noting that high-end homes were still selling quickly in desirable areas despite the economic headwinds.
Policy and Tax Influences
Tax policies have also played a subtle but important role. As mentioned, the 2017 Tax Cuts and Jobs Act (with its SALT deduction cap) made Arizona more attractive to wealthy individuals from places like California and New York.
Additionally, Arizona’s relatively low property taxes (compared to coastal states) mean that on a multi-million-dollar home, an owner might save tens of thousands per year in taxes by residing in Arizona.
Over the 2018–2023 period, there were also no major negative changes to federal housing tax benefits (the mortgage interest deduction was preserved for mortgages up to $750K, which most luxury buyers exceeded anyway, often mitigating via larger down payments).
All told, the policy climate has been favorable: Arizona’s pro-growth stance and lower-tax profile provided an extra incentive – on top of lifestyle reasons – for high earners to buy homes in the state. In the preceding decade, tax-driven migration was less of a factor, but it has since become part of the calculus for wealthy homebuyers (and some companies relocating employees to the Sun Belt).
Influx of Out-of-State Buyers and Migration Trends
One of the most defining trends of 2018–2023 was the surge of out-of-state buyers – especially from high-cost coastal markets – moving into Arizona’s housing market.
The California Connection
California in particular has loomed large as a feeder of high-income transplants. Throughout the 2010s, Arizona always drew new residents from California, but the flow accelerated dramatically toward the end of the decade.
Net migration from California to Arizona, which had actually dipped to nearly zero around 2010–2011 during the economic slump, exploded in the late 2010s and early 2020s. By 2020–2021, more than 30,000 people were moving from California to Arizona each year on net – many of them in the upper income brackets.
Income Migration Patterns
In fact, newly released IRS data reveal that Maricopa County (greater Phoenix) gained more income (tax filings) via migration than any county in the nation in 2021. The average household moving into Maricopa that year earned about $92,000, significantly higher than the ~$77,000 average of those moving out.
This indicates a “brain gain” and wealth gain for Arizona: incoming migrants tended to be more affluent than those leaving, a pattern that held true across much of the Sun Belt during the pandemic.
Diverse Geographic Origins
Wealthy newcomers have arrived from not only California but also places like the Pacific Northwest, the Midwest, and the Northeast. During 2018–2023, realtors reported an uptick in buyers from states such as Washington, Illinois, New York, and even Florida – often people transferring for work or seeking a more affordable market for a second home.
Shifting Demographics
The demographic of these migrants has skewed younger than Arizona’s traditional snowbird retiree contingent. “My clients aren’t retirees,” one Phoenix-area broker said in 2021, referring to a wave of tech entrepreneurs, physicians, and other professionals relocating from big cities nationwide.
This marks a shift from the 2008–2017 era, when Arizona’s population growth was more dominated by retirees and moderate-income families. Today’s high-income transplants are reshaping the state’s image, turning it into a hub for young wealth and talent.
In fact, Arizona’s long-standing reputation as a haven for retirees is being challenged by this influx of “young, wealthy people” putting down roots.
Migration Motivations
The motivations for these interstate moves dovetail with the factors mentioned earlier: lower taxes, larger homes, and a desirable lifestyle. A Sotheby’s agent in Scottsdale noted that relocated Californians account for a large portion of new luxury homebuyers in that area.
Many of these buyers have sold expensive properties in California and found they can buy a mansion in Arizona for a fraction of the cost of their previous home. Additionally, some high earners who maintain businesses in California chose to reside in Arizona (or at least purchase homes there) following the shift to remote or hybrid work models.
This pandemic-era migration of affluence into Arizona mirrors a national trend: large urban counties like Los Angeles, San Francisco, and New York saw an exodus of high-income households in 2020–2021, while Sun Belt destinations like Arizona enjoyed a corresponding influx.
Second-Home Market Growth
Not all inbound high-income buyers are full-time relocators; a subset are purchasing second homes. Arizona’s resorts and natural attractions have long drawn tourists – now, more of those with means are becoming part-time residents.
During 2018–2023, it became common to hear of a tech executive from Seattle buying a winter home in Scottsdale, or a finance professional from Chicago snapping up a vacation property in Sedona.
These trends were present before (e.g., Canadians and Midwesterners owning winter homes in Arizona), but the scale in this period was larger and often involved higher price points. The competition from out-of-state wealth has sometimes squeezed local high-earners, contributing to fierce bidding wars in luxury neighborhoods at the peak of the market boom.
Regional Differences: Phoenix vs. Tucson and Beyond
Arizona’s high-income homebuying surge has been geographically concentrated, with notable differences between regions.
Phoenix Metro Dominance
The Phoenix metro area (Maricopa and neighboring Pinal County) overwhelmingly led the state’s growth in luxury home purchases. Maricopa County alone accounted for over 90% of Arizona’s net population inflow in the 2010s, and it remains the primary destination for affluent newcomers.
This is not surprising, as Phoenix offers the most extensive job market, amenities, and high-end housing inventory in the state. Within Greater Phoenix, upscale enclaves such as Scottsdale, Paradise Valley, Arcadia, and parts of the East Valley attracted the lion’s share of $500K+ earners.
Scottsdale and Paradise Valley, in particular, are known for multi-million-dollar estates and have seen record-breaking sales (including a $24 million sale in 2020) during this timeframe. These areas combine luxury living with proximity to urban conveniences, making them magnets for wealth.
An interesting development in late 2022–2023 was the rise of Tempe as a hot spot for high-end buyers – traditionally known as a college town, Tempe’s central location and new luxury builds started drawing West Coast transplants looking for both convenience and upscale options.
Tucson’s Niche Market
In contrast, Tucson (Pima County) has played a smaller, but still noteworthy, role in high-income homebuying trends. Tucson’s luxury market is thriving in its own right, though on a more modest scale than Phoenix’s.
Affluent buyers in Tucson often include a mix of people different from Phoenix’s cohort: there are indeed remote professionals and entrepreneurs coming in, but Tucson continues to attract many retirees and “snowbirds” seeking a warm climate and laid-back lifestyle.
Popular high-end areas around Tucson – such as the Catalina Foothills, Oro Valley, and gated golf communities – have seen steady demand. These buyers value privacy, desert beauty, and the slightly lower price points Tucson offers for luxury (compared to Scottsdale).
For example, a custom home that might cost $3 million in Scottsdale could be perhaps $2 million in a prime Tucson foothills location. Over 2018–2023, Tucson experienced healthy luxury home price appreciation (often outpacing national averages), and inventory in the upper tier remained tight.
The city’s economic base (aerospace, defense, University of Arizona, healthcare) has drawn some high-income professionals, contributing to this demand. Whereas Phoenix’s boom has been about big influxes from out of state, Tucson’s growth, while including out-of-state buyers from California and the Pacific Northwest, also relies on regional and seasonal movers – a continuation of patterns from past decades.
Northern Arizona and Beyond
Other regions in Arizona also saw pockets of high-income homebuying activity. Northern Arizona communities like Flagstaff (Coconino County) and Sedona (split between Yavapai and Coconino) gained interest from affluent buyers, particularly as remote work allowed people to live farther afield.
Sedona’s scenic red-rock setting attracted some wealthy purchasers looking for second homes with spiritual or retreat appeal. Flagstaff, with its cooler climate and mountain terrain, became a desirable summer-home locale for some Phoenix and California elites.
While these areas are smaller markets, 2020–2023 did bring unusually strong luxury sales to some of them (Sedona saw multiple multi-million-dollar home sales, a trend that was rarer in 2008–2017). Lake Havasu City and other parts of Mohave County similarly drew a niche set of affluent boaters and retirees from California, continuing a slow but steady inflow that’s been observed for decades.
Changing Regional Balance
It’s also worth noting how the balance between regions changed versus the prior decade. During the housing bust and slow recovery (circa 2008–2012), Phoenix and its suburbs bore the brunt of price declines, and luxury development paused statewide.
As the recovery took hold (2013–2017), Phoenix bounced back first and fastest, but Tucson lagged somewhat and outlying areas stayed quiet. In 2018–2023, Phoenix not only roared ahead but actually widened its lead – it became one of the top luxury real estate markets nationally in terms of price growth.
Pima County’s share of new wealthy migrants declined in relative terms (Pima formed just ~9% of Arizona’s net in-migration in the 2010s), reflecting that many high-income newcomers skip over Tucson in favor of Phoenix’s greater opportunities.
Still, Tucson’s luxury scene today is markedly more active than a decade ago; it has benefitted from the general tide of affluence moving into Arizona, just to a lesser extent. Meanwhile, smaller counties like Yavapai and Mohave continued their long-term pattern of steady net in-migration – often retirees or second-home buyers – a trend consistent with the previous decade but amplified by the pandemic-era desire for space.
Outlook and Closing Thoughts
From 2018 through 2023, Arizona transformed into a prime destination for America’s elite homebuyers, accelerating trends that had been building throughout the 2010s. Wealthy households have flocked to the state’s sprawling metros and scenic enclaves, drawn by a combination of economic opportunity and lifestyle appeal.
They have reshaped demand patterns – favoring suburban mansions with upscale amenities – and have helped drive home prices to record highs. Economic forces like low interest rates (early on) and tax reforms provided additional fuel, while later inflation and rate hikes tested the market’s resilience.
Compared to the 2008–2017 period, when Arizona was recovering from a real estate bust and growth was more muted, the recent five-year span stands out for its rapid influx of high-income buyers and swift market expansion.
Future Implications
These trends also carry implications for Arizona’s future. The heavy concentration of wealth in certain areas may spur further luxury development (new high-end communities, golf resorts, etc.) to cater to demand.
At the same time, it raises questions about sustainability: the 2023 market slowdown hinted that even the rich are not invincible to economic cycles. How Arizona manages issues like housing supply, infrastructure, and cost of living amid an influx of affluent residents will shape the next decade.
For now, the state’s mix of climate, space, and favorable economics continues to act like a magnet for high earners. As one local expert put it, many see Arizona as their “post-pandemic paradise” – a place where they can enjoy an enviable quality of life and solidify their real estate investments for the long run.
References
- “Zillow’s Most Popular Markets of Early 2022: Pricey Suburbs Top the List” – Zillow Research
- “Tech, home wellness amenities are emerging trends in the luxury real estate of the Town of Paradise Valley” – Arizona Digital Free Press
- “Young, Rich Newcomers Are Transforming Phoenix, Arizona” – Business Insider
- “Raising the SALT cap is a gift to high-tax states” – Reason Magazine
- “Luxury-Home Sales Sink Record 45% to Near-Record Low” – Redfin News
- “Luxury Home Prices Hit All-Time High As Record Share of High-End Buyers Pay Cash” – Redfin News
- “Tax Data Reveals Large Flight of High Earners from Major Cities During the Pandemic” – Economic Innovation Group
- “Phoenix among Top 10 for increase in luxury home values” – AZ Big Media
- “Tucson’s Luxury Market: Insights into the Current Trends & Future Predictions” – GS Real Estate Group AZ
- “Migration to and from Arizona, Updated (August 2024)” – Arizona State University (Office of the University Economist)
