For the first time since the 2008 crisis, homebuyers may have an easier time buying a home in the city than in a suburb, according to a new Zillow® report.
Homes in the suburbs are appreciating faster than urban homes since July 2021, indicating stronger demand and fiercer competition, the report said, reversing previous norms—and very different from the first 15 months of the pandemic. The new trend is largely due to the impacts of remote work on housing, Zillow said, citing a report from the National Bureau of Economic Research that found the shift to remote work is responsible for more than half of the gain in U.S. home prices since late 2019.
The typical home in the suburbs gained $66,490 in value in the past year, compared to $61,671 for the typical urban home. From January 2013 through June 2021, urban homes were generally appreciating faster.
“While urban home value gains have continued to accelerate, the suburbs are even hotter, showing just how strong demand is for limited suburban inventory,” said Zillow economist Nicole Bachaud. “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.”
However, the study showed that homes in urban areas have seen huge growth too. “This is not a case of housing in the suburbs gaining value at the expense of urban real estate; rather, it’s something akin to one world-class sprinter edging out another,” Zillow economists said, adding that there are signs that demand may be shifting back in favor of urban homes.