I had cashflow from other properties and business income to cover the shortage. 

Water shortage is still a major issue. 

Whatever the reasons, a buying frenzy kicked off and drove prices higher, which created a shortage of inventory, which created more equity in existing properties, which created a buying frenzy that drove prices even higher, which . . . you get the point.It should be clear to the casual observer that rent rates and sales prices can't increase forever.

My parents live in Prescott, Arizona and it seems to be an area that has continued to boom, has low vacancy rates, and a bit of a shortage of rentals.

We currently have a major shortage of inventory in this area, so it's not really a matter of "where the best place to buy", but more a matter of "can you find a house you like and actually purchase it?".   

The reason there is a housing shortage has nothing to do with STRs and everything to do with politics.

To @Bruce Lynn point, the rents are not high compared to house values right now - shortage of supply is driving up the prices.  

Shortage is at 3 months....

But regardless- Navigating the 2024 market presents challenges beyond just inventory shortages.

Also, there is a shortage of housing and a very high demand for rentals due in part to being a tourist town, but also because of an influx in people on coming from the west coast.