January 30, 2023

Tucson Q4 Market Insights: Transaction activity slows, but large sales continue

Highlights:

Operating conditions in the Tucson multifamily market softened during the fourth quarter, as asking rents decreased for the first time in roughly seven years, and local vacancy spiked. Renter demand in 2022 was slightly negative, after absorption totaled approximately 1,150 units in 2021.
After tightening for the past few years, area vacancy was on an upward trajectory in 2022. The rate trended higher for the fifth consecutive quarter in the final three months of the year. Vacancy rose 110 basis points in the fourth quarter, reaching 7.4 percent. Year over year, the rate spiked 300 basis points.
As vacancies continued to push higher, operators brought rents lower. During the fourth quarter, asking rents decreased by less than 1 percent to $1,157 per month. Despite the recent dip, rents still advanced 5.2 percent in 2022.
Transaction volume in the last three months trailed levels recorded during the previous quarter. Prices continued to push higher as the median sales price for 2022 reached $149,700 per unit, up 32 percent from the median price last year.