Suburban areas experience faster growth in home values compared to cities

Home values in suburban areas have been increasing faster than those in cities for the first time in years, according to the new market analysis from Zillow. The recent growth in suburban home appreciation is linked to the pandemic-related shift to remote work, which had a major impact on the real estate industry. 

Since January 2013, urban home values have been generally growing more quickly. But in the past fifteen months, we are seeing the opposite. The typical urban home has gained $61,671 in value in the past year compared to the $66,490 for the typical suburban home.  

"In the beginning of the pandemic, home values in urban areas generally outpaced suburban areas, counter to what many expected during the rush for more space," said Zillow economist Nicole Bachaud. 

"And while urban home value gains have continued to accelerate, the suburbs are even hotter, showing just how strong demand is for limited suburban inventory. That could mean competition for homes will be lighter near city centers this home shopping season, something we haven't been able to say for nearly a decade. That's not to say shopping for a home in the city will be a leisurely affair, but any sliver of opportunity for buyers is welcome in this market."

Both urban and suburban housing markets are experiencing storing demand from buyers and fierce competition. In some metro areas, such as San Francisco, Columbus, Seattle, and Boston, suburban home values grew especially fast. 

But that does not mean that people no longer want to buy homes near city centers. Other cities, including San Jose and Austin, are seeing more significant gains in home prices than their suburban counterparts. 

Resources:

“Where have home values grown more, suburbs or cities? The answer may surprise you,” by Holden Walter-Warner, research by Christian Bautista (The Real Deal, 2022)

“Home buyers may find less competition near city centers for the first time in years,” (Zillow, 2022)

“Suburbs Far Outpace Urban Areas in US Home Value Growth,” by Alexandre Tanzi (Bloomberg, 2022)