17 Arizona cities ranked by estimated cap rate. The average cap rate across Arizona markets is 3.5%, with median home prices averaging $406K and rents averaging $1,709/mo. Safford leads with a 6.0% cap rate at a $295K median price. Arizona's low average property tax rate of 0.63% gives investors a significant cash flow advantage.
Arizona offers 17 investable rental markets tracked by CapRateCity. The state average cap rate of 3.5% is near the 3.81% national average. No cities pass the 1% rule at median prices, so value-add strategies are essential.
Prices and rents: Arizona home prices average $406K, which is 22% above the national average of $333K. Rents average $1,709/mo. The most affordable entry point is Sierra Vista at $260K, while Safford offers the highest cap rate at 6.0%.
Taxes and costs: Property taxes average 0.63% across Arizona, below the 1.08% national average — a meaningful cash flow advantage that adds roughly $1,832 per year to NOI on an average-priced property. Scottsdale has the lowest rate at 0.58%.Vacancy averages 5.0%, tighter than the national average — favorable for landlords.
Growth outlook: Population growth across Arizona averages 1.58% per year, led by Surprise at 2.5%. Home values are appreciating at 3.0% annually on average. Strong population growth is driving housing demand and supporting both rent increases and price appreciation across the state.
Bottom line: Arizona is primarily an appreciation market. Cash flow investing requires below-median purchases or value-add strategies. Consider whether the growth and appreciation potential justifies tighter margins.