Phoenix is home to Arizona State University and numerous high-tech and telecommunications companies that have recently relocated to the area. Due to the warm climate in winter, Phoenix also benefits greatly from seasonal tourism and recreation, especially in the golfing industry. The military has a significant presence in Phoenix with Luke Air Force Base located in the western suburbs. Located in Downtown Phoenix, Scottsdale and other surrounding areas are a large array of cultural activities, including the Phoenix Symphony Hall, Phoenix Art Museum, Center for Creative Photography, Heard Museum and the Pueblo Grande Museum and Cultural Park.
Investments in single-family rental properties have good potential mainly in Phoenix. (Forbes 2017)
Investing in Arizona no longer means dubious retirement projects in the desert - a kind of Florida West with sand instead of swamp. You can find those too if you like taking a flyer, but Phoenix and Tucson have grown up and offered investors a range of possibilities. In addition to the big cities, Prescott does cater to retirees, Flagstaff has a younger demographic, and Yuma has a heavily immigrant population; all have different housing needs.
The strongest economic growth, and therefore strongest demand for housing, is in Phoenix, where jobs are being added at twice the national rate - many of them in healthcare, retail, and the large finance sector. Job growth has also been strong in Prescott, mostly in the retail and healthcare sectors as you would expect from the retiree population.
Home prices in all Arizona markets rose and fell sharply in the boom and bust, but afterward prices in Phoenix - and somewhat in Prescott - went through a mini-boom of speculation in foreclosed properties. It looks like those have now been flushed through the system, so we can take at face value the recent price increases - strongest in Phoenix, Flagstaff, and Prescott, weaker in Tucson and Yuma. I expect Phoenix prices up at least 25 percent over the next three years, which means you shouldn't wait if you plan to buy there. Prices have been strongest in Phoenix itself, slightly weaker in the southeast suburbs.
Mortgages are a good investment right now. Because home prices will keep rising the next few years, the equity cushion for new mortgages will grow quickly; yet prices are in balance with local incomes, so the risk of default will stay average. Construction loans also will have an average risk in the growing markets, especially Phoenix, where I expect 60,000 new single-family homes built over the next three years.