TUCSON (October 23, 2024) -- Picor's multifamily team, Allan Mendelsberg, and Joey Martinez report the outlook for the Tucson multifamily market remains neutral for the third quarter in Marketbeat Tucson Multifamily Q3 2024.
For current owners, maintaining effective management and retaining high-quality tenants is crucial for sustaining strong asset performance in the face of prevailing challenges. Key factors include the upcoming election, projected declines in interest rates, and limited supply from small to mid-sized complexes. Institutional investment is likely to gain traction in 2025 as existing debt matures.
As Q3 2024 concluded, Tucson's economy demonstrated significant achievements. The median household income rose 4.7% year-over-year to $70,900, boosting local consumer spending. The nonfarm employment sector expanded modestly by 0.2% year-over-year, reaching 403,400 jobs. Notably, Tucson's unemployment rate decreased to 3.3%, lower than the national rate of 4.2%, reflecting a tightening local labor market. At the same time, Tucson's population growth outpaced the national average, growing at 1.3% year-over-year, compared to the U.S. rate of 0.5%. This trend underscores Tucson's continued economic strength and resilience, signaling sustained growth and a stable employment environment.
Tucson's apartment vacancy decreased to 8.42% in Q3 2024, down 0.70% from Q2 2024. Highlighting continuous improvements, six of Tucson's 15 submarkets experienced improvements in vacancies.
Inventory increased by 1,431 units, which shows the strong demand for housing. Market activity remained steady for properties under 100 units, with most transactions receiving multiple offers. In Q3 2024, no transactions occurred for properties over 100 units, which was anticipated following a considerable slowdown in sales of larger properties over the past year, as many owners and investors continued to monitor interest rates, the outcome of the presidential election, and the overall state of the economy.
This time of year, Tucsn slows down with prospects searching for rentals. The units on the market need to have a strong marketing strategy and materials and show well when prospects tour. Every tour counts, and more products are typically available this time of year for prospects to be more selective. We have seen prospects looking for value and trying to keep their budget in line for housing due to the current economy.
Retention is key, as is keeping increases within the current market. However, there are still pockets of Tucson looking for renovated units at a premium value.
Read the full Marketbeat Tucson Report here.
