Overview
Arizona has become one of the fastest-growing states, attracting residents with warm weather, relatively affordable housing compared to California, and a strong job market. The Phoenix metro area dominates the state's economy and housing market, while Tucson offers a more affordable alternative. The state has no tax on Social Security, making it popular with retirees.
Arizona Real Estate Market
Arizona's real estate market experienced explosive growth during the pandemic as remote workers fled expensive coastal cities. While prices have cooled from 2022 peaks, Phoenix remains one of the hottest markets in the country. Tucson offers more affordable options with similar climate benefits. The state continues to attract major employers like TSMC, Intel, and various tech companies.
Property Taxes in Arizona
Arizona has relatively low property taxes compared to the national average. The state uses a unique system with separate "limited" and "full cash" values.
Average effective rate: 0.62%
Annual tax on median home: ~$2,635
Senior freeze: Property valuation freeze for qualifying seniors
First-Time Buyer Programs
Arizona IDA Programs:
- HOME Plus - Up to 5% down payment assistance
- Pathway to Purchase - For moderate-income buyers
- MCC Tax Credit - Federal tax credit for mortgage interest
- HOME in Five - Maricopa County specific program
Closing Costs in Arizona
Arizona closing costs are moderate, typically 2-3% of purchase price.
Common costs include:
- Title insurance: Based on purchase price
- Escrow fees: Split between buyer and seller
- Recording fees: County-dependent
- No transfer tax
Frequently Asked Questions
Arizona has strong fundamentals for investment: rapid population growth, diverse economy, landlord-friendly laws, and strong rental demand. However, prices have risen significantly, affecting cap rates.
Summer heat is extreme in Phoenix (often 110°F+), which affects lifestyle and utility costs. However, most homes have pools, and the rest of the year enjoys pleasant weather. Mountain communities like Flagstaff offer cooler alternatives.
Water availability is a long-term consideration. Arizona has senior water rights and extensive infrastructure, but new developments in some areas face restrictions. This is an important factor for property research.