December 12th, 2008 by Michael Oliver

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I thought it was interesting to take a look at the historical population of Tucson Arizona. As anyone can see from this chart the population of Tucson has exploded in 150 years. In just the past 60 years Tucson has gone from just over 45,000 people to in excess of 525,000! Now these numbers are only for just the “metro” region of Tucson and they do not include Marana, Oro Valley, Sahuarita, Vail, and Green Valley. When those numbers are included it brings the Tucson region up to over 1,100,000 in total population. What this chart also shows is that Tucson continues a growth trend that will increase housing, and land needs. Even 10 years ago many parts of Marana and Sahuarita, as well as many parts of Oro Valley did not even exist. Today those areas are essentially matured boomtowns that are now growing even further and this trend will continue. The Tucson area attracts many people relocating that are in need of a mild winter climate, reasonable housing costs, and high quality of life. Add to this the economic power that increases in population bring with it. (As more people move to an area it naturally becomes richer as more products are needed as well as individuals wealth is transferred along with them to the new area.)

What I think is interesting to note in relation to this chart is the “booms” in population Tucson has experienced in the past and then what occurred to spur that growth. From 1860, to 1870 Tucson experienced a “gold rush” really it was more of a silver boom due to cities like Tombstone, Bensen, and Bisbee. Afterwards the only 10 year decline in population occurred from 1880 to 1890 as the silver boom died out 26.5% of the residents that had lived in Tucson in 1880 had relocated elsewhere. From that point on Tucson experiences substantial growth for every decade since then. The biggest boom in both percentage and actual number of people relocating occurred only 50 years ago from the 1950’s to the 1960’s. From 1950 to 1960 Tucson population had exploded by a staggering 368.4% in 10 short years! Think about this if you lived in Tucson (a lot of you may have) during 1950 10 years later in 1960 there were over 3.5 times as many people inhabiting the same area! Since 1960 every decade Tucson has seen a 20%+ population growth rate. In 2010 I assume we will also be close to this same 20% growth rate as a lot of Californians and people from other wealthier states sold their homes and relocated to the Tucson area. We may not reach the 20% growth rate in the actual Tucson “metro” region however when the overall Tucson region is calculated it will be at least 20% growth from 2000.

What does this hold for Tucson real estate? Well this is by some accounts a blog about Tucson’s real estate market and market forecasts. The numbers do not lie the population of the entire state is growing faster then every state but Nevada. This will account for Tucson getting a very high number of the relocating residents. All these residents have to live somewhere? Most are going to eventually purchase a home. The more demand for homes the more likely prices are to go up unless supply can quench that demand thirst. Well for the past 3 years the supply has been overwhelming to say the least, and buyers new to the area have had a great many choices where to buy. However eventually (I think 2009 will be that year) the supply will start to be absorbed and the demand will stay the same if not increase due to the greater amount of people needing homes to live in. I think it is safe to say that on the whole the pressure for Tucson real estate in general will be to climb in price due to the fact that people will have to move further and further away from the main metro region to find affordable housing. Already today housing in the “Foothills” is somewhat limited because there are few large buildable tracts of land for a home builder to offer new supply. On the Northwest what was once the “far out area of Oracle and Ina” is now essentially the middle of the Northwest Tucson submarket. Today’s definition of “far away Northwest” in my mind would be I-10 and Sandario Rd in Marana. Even the Tangerine and I-10 corridor a couple of miles south has plans to become an upper end area. (However FEMA has put a lot of doubt on that by putting a significant amount of that area in a new flood zone….)

Every city in the US that has seen long trends of sustained population growth has also seen a direct increase in that areas home and land prices. I would for sure classify 150 years of sustained population growth as passing this test. Furthermore I feel like as the population grows people are going to truly want to be within 45 minutes of “Downtown Tucson” for numerous reasons right now the growth of the city is pushing this “time barrier” to its limits. With this being said look for a lot of higher density infill projects to become the new development trend in Tucson once the real estate market gets back on its feet here. Once this starts to happen the days of “single family” new homes within the metro area will be over given that it will be much more profitable for a developer to do higher density projects. This will escalate the worth of the single family homes specifically in higher end areas of the “metro region”. This already in fact has been the case even during the current real estate downturn as neighborhoods such as: The El Encanto district (neighborhood) have seen regular price increases amid an overall downturn in home prices for the Tucson region. This shows the willingness that people are still willing to pay premiums to live close to town in upper end areas regardless of overall real estate market. So the moral of this statement is make sure you buy in the best neighborhood you can afford even if it the smallest home since the neighborhood itself a lot times can retain or increase the value of your home regardless of the actual “regional” housing trend.