2023 Trends and Challenges of Homeownership in Arizona

Homeownership has long been a staple of the American dream, but it is becoming increasingly out of reach for many people, especially younger generations. In Arizona, the median home price is now over $500,000, and mortgage rates are rising. This is making it difficult for many Arizona first time home buyers to afford a home. 

For generations, the idea of owning a home has symbolized stability, security, and success. However, the landscape of the American workforce is changing and more younger people are joining. In Arizona, a state known for its diverse landscapes and vibrant communities, the future of homeownership is taking on new dimensions. 

This article explores the challenges that lie ahead for Arizonians, focusing on the impact of student debt and shifting perspectives on homeownership.

Arizona’s Housing Market at a Glance  

Despite the national trend of declining home prices, Arizona’s housing market has remained resilient and relatively strong. However, home prices statewide were up 27.6% year-over-year in December. At the same time, the number of homes sold fell 7.1% and the number of homes for sale fell 19.2%. Moreover, Home prices in Arizona were up 1.1% year-over-year in August. At the same time, the number of homes sold fell 4.1% and the number of homes for sale fell 30.2%. The median sale price of Arizona housing is around $437,900. 

Arizona, the seventh most populous state in the U.S., has been experiencing a constant influx of new residents, contributing to a steadily growing demand for housing. Unfortunately, this strong demand has outpaced the available supply of homes, resulting in a housing shortage. Nevertheless, there are signs of change on the horizon, as the state has witnessed a year-over-year increase of over 25% in the number of homes listed for sale, according to the real estate website Redfin.

Low Inventory Levels and Arizona’s Housing Crisis

The shortage of available housing has played a significant role in exacerbating Arizona’s affordable housing crisis. Investors from various parts of the country have been showing keen interest in Arizona’s real estate market, and the construction of new housing units has not kept pace with the rising demand.

Furthermore, with a growing number of employees having the option to work remotely, they are no longer restricted to residing in cities where their employers are located. Instead, they have the flexibility to move to more affordable regions, enjoying a higher quality of life and reduced living costs. 

The state has been a popular destination for retirees and newcomers for many years, and the demand for housing has been outstripping supply. This has led to bidding wars and soaring home prices.

Consequently, this interstate migration has driven up rental prices in Arizona month after month, making it an attractive investment opportunity for investors seeking profitable returns.

Rising Interest Rates Hit Arizona Hard

As the Federal Reserve continues its series of interest rate hikes, one city that is feeling the repercussions is Phoenix, Arizona’s capital. During the pandemic, Phoenix’s real estate market thrived, leading to what many believe were significantly overvalued property prices.

The Phoenix housing market has been marked by intense competition, with homes typically receiving three offers and selling within about 40 days. The median home sales price has surged by 8.9%, reaching $435,000 per month, compared to the same period the previous year. Additionally, the average sales price per square foot in Phoenix has seen a 7% increase over the past year.

However, the scenario is changing rapidly in Phoenix as it is now among the major U.S. markets experiencing a swift cooldown due to the rising interest rates. Consequently, investors are finding loan terms and yields less attractive, and prospective homebuyers are struggling to qualify for loans they previously qualified for.

Despite the cooling in the Phoenix housing market, the shortage of available housing remains a challenge, and it will take time for inventory levels to return to their previous levels. With limited available properties, even with increasing costs, house prices are likely to remain elevated. While Phoenix is the largest market in Arizona, other cities like Tucson are still healthy real estate markets, albeit not as hot as they were earlier in the year. Demand remains strong, and new construction homes are on the rise.

The Student Debt Conundrum

In recent years, the issue of student debt has come to the forefront of the national conversation. Across the United States, millions of young adults are burdened by student loans, and Arizona is no exception. The rising cost of education has left many graduates saddled with significant debt, impacting their ability to pursue traditional homeownership.

One of the critical challenges facing younger generations in Arizona is the need to balance their student debt obligations with the desire to own a home. High monthly loan payments can make it difficult for individuals to save for a down payment or qualify for a mortgage. As a result, many are delaying or reconsidering their plans for homeownership.

However, the future of homeownership in Arizona is not entirely bleak. Several factors are reshaping the landscape and providing new opportunities for those with student debt.

Inflation and Rising Cost of Living Diminishing Savings

The rising cost of living in Arizona is making it increasingly difficult for people to afford to buy a home. Meanwhile, wages have not kept pace with the rising cost of living, making it difficult for people to save up for a down payment and qualify for a mortgage.

Another factor contributing to the rising cost of living is inflation. The prices of goods and services, such as food, gas, and utilities, have all increased in recent months. This has made it more difficult for people to make ends meet, and it has reduced their disposable income.

The rising cost of living is having a significant impact on homeownership in Arizona. Many people are now priced out of the housing market, and even those who can afford to buy a home are struggling to qualify for a mortgage. This is especially true for first-time homebuyers, who typically have less money saved for a down payment and higher credit card debt.

The high cost of housing is also having a ripple effect on the rental market. As more people are unable to afford to buy a home, they are forced to rent. This has led to increased demand for rental units and higher rent prices, further diminishing savings of Arizona residents.

Delayed Homeownership

Another aspect of changing perspectives on homeownership is the acceptance of delayed homeownership. Younger generations are no longer in a rush to buy a home, recognizing that there are other important life milestones to achieve first, such as career advancement, travel, and personal development. This shift has led to an increase in the age at which individuals are purchasing their first homes.


As Arizona continues to grow and diversify, it is essential for policymakers, lenders, and real estate professionals to adapt to the changing landscape. By addressing the unique needs and aspirations of younger generations, Arizona can pave the way for a future where homeownership remains an achievable and fulfilling dream, even in the face of student debt and shifting perspectives.