From stability to surges: Some predictions about Arizona’s real estate market in 2025 and beyond
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Alana Mann
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By Alana Mann | President & Owner, The Statesman Group
After weathering one of the most turbulent and unconventional real estate markets in Arizona’s history — from pandemic bidding wars to interest rate shocks — I’m confident that 2025 will mark a turning point, bringing much-needed stability. But the outlook also brings shifting dynamics, emerging opportunities and potential challenges that could reshape the future of housing across the country — and particularly in the Sun Belt.
A new era of housing stability
The past few years have tested both buyers and sellers with unprecedented swings: record-low mortgage rates followed by the fastest rate increases in 40 years, extreme inventory shortages and double-digit cost appreciation.
While Arizona — and the nation — still struggles with a stubborn housing shortage, I believe 2025 will be the year of recovery and stabilization with minimal escalation in purchase prices. The luxury market will enjoy surges in home values, but all other housing markets will likely remain flat despite surging demand, thanks to interest rates settling into the 6 to 7% range, creating a delicate balance between affordability and market sustainability.
One of the most intriguing aspects of the Arizona market is the sheer scale of pent-up housing demand. With projections suggesting that it could take a decade or more to fully address the shortage, the pressure for more homes is only intensifying. Yet, this demand is poised to ignite a new wave of optimism in the market — especially as economic confidence rebounds and builders are encouraged to increase their development activity. As both seller and buyer sentiment improve, the resale market will also see a resurgence.
The perfect storm for real estate investment
For those keeping an eye on the market, 2025 could present one of the best opportunities in recent years to invest in real estate. Whether through 1031 exchanges or all-cash transactions, investors are expected to flood the market, riding the anticipated “red wave” of policy shifts and economic stability. With this influx of investment capital, expect the market to tighten and prices to hold steady — while high-net-worth buyers continue to drive demand for luxury homes in the most desirable Sun Belt locales.
Meanwhile, the cost of goods and services will gradually stabilize, creating a healthier, more predictable economy. But while the luxury segment thrives, the road ahead remains tough for first-time homebuyers who continue to battle higher interest rates and limited inventory. For many, the dream of homeownership remains elusive, especially in Arizona, where affordability issues persist.
The shifting demographics of homebuyers
One of the most fascinating trends unfolding in the housing market is the Baby Boomer effect. As this generation ages, more and more Boomers are downsizing or opting for what I call “right-sizing.” This is the growing demand for lock-and-leave properties — typically condos or single-level homes in 55+ communities — offering maintenance-free living and the freedom to travel without the burden of home upkeep.
In Arizona, the demand for these types of properties will continue to surge. Boomers are seeking out communities that allow for socialization, where they can mingle with like-minded neighbors and enjoy their golden years in a vibrant, safe community without the stress of natural disasters such as hurricanes and tornados. Imagine luxury gated communities, resort-style amenities and a strong sense of community for socialization. Developers who can tap into this desire — and adapt their offerings to meet it — will find themselves at the forefront of a major market shift.
The big bold prediction
As for my boldest prediction? Toward the tail end of President Trump’s administration, we may witness what could become one of the largest housing booms in history. With the political landscape shifting, potential changes to mortgage rates and a return to economic stability, the stage is set for a massive surge in housing activity. It’s a bold claim, but with market trends aligning, this housing boom could prove to be a once-in-a-lifetime opportunity for savvy investors and homebuyers alike.
The road ahead: A historic opportunity
As we stand at this pivotal moment in Arizona’s real estate evolution, the convergence of demographic shifts, economic factors and market dynamics creates an unprecedented opportunity. The market indicators I’m tracking point to 2025 being more than just another year of recovery — it’s positioning itself as the launchpad for Arizona’s next great real estate transformation.
The message is clear: 2025 won’t mirror the frenzied growth of recent years, but it promises something potentially more valuable — a sustainable, strategic market backed by strong fundamentals and genuine demand. For those ready to make their move, the next few years won’t just be rewarding — they could be transformative. The window of opportunity is opening, and the savvy players who act decisively will reap the greatest rewards of this new era in Arizona real estate.
