In what’s seen as reversal in real estate values during the COVID-19 pandemic, suburban home prices are growing faster than those in cities, says online real estate brokerage firm Zillow.
Since July 2021, reports the company, suburban home values outpaced those in urban areas, a reversal from the first 15 months the pandemic.
"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,” she added.
In the New York market, city home prices grew by $55,526 year over year compared to their suburban counterparts which grew by $65,936; in the Chicago market, city home prices grew $22,599 compared to $41,607 in a year’s time, Zillow reported. In the Houston market, city home prices increased by $28,239 compared to $51,467 in a year’s time.
The typical suburban home gained $66,490 in value in the last year compared to $61,671 for the typical city house, Zillow found. That’s a reversal from the previous norms and the first 15 months of the COVID-19 pandemic, the company said, reporting that between January 2013 – about the time home values began recovering from the 2008 housing crash – through June 2021, city homes were generally increasing faster than their suburban counterparts.
The National Bureau of Economic Research found the shift to remote work was initially beneficial to suburban housing prices.
“In each of the first three months of this year, the gap between annual home value growth in the suburbs and in urban areas has shrunk,” Zillow said in its report. “Annual suburban home value growth outpaced urban home value growth by about $7,250 in December, but only by about $4,820 in March.”
