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Home buyers may find less competition near city centers for the first time in years

Home buyers may find less competition near city centers for the first time in years


Suburbs are generally seeing home values grow more than urban areas, indicating more competition

  • Suburban home values have been growing faster than those in urban areas since July 2021, a reversal from previous norms and from the first 15 months of the pandemic.
  • With remote work now an option for more households, many buyers are prioritizing affordability over proximity to the workplace.
  • Understanding which areas are most competitive can help home shoppers navigate today’s hot sellers market.

SEATTLE, May 18, 2022 /PRNewswire/ — For the first time since the Great Recession, buyers may have an easier time buying a home in the city than in nearby suburbs this home shopping season. That’s because homes in the suburbs recently have been appreciating faster than urban homes, a new Zillow® analysis shows, indicating stronger demand and fiercer competition.

While competition is strong in most of the country, there are pockets of opportunity for home buyers. 

Home values in suburban ZIP codes have been growing faster than those in urban areas since July 2021. The typical home in the suburbs gained $66,490 in value in the past year, compared to $61,671 for the typical urban home. That is a reversal from previous norms and from the first 15 months of the pandemic. From January 2013 — about the time when home values began to recover following the housing crash — through June 2021, urban homes were generally gaining value more quickly.

“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.”

Faster home value growth in the suburbs comes as remote work has changed the U.S. housing landscape. Research from the National Bureau of Economic Research found the shift to remote work is responsible for more than half of the gain in U.S. home prices since late 2019, and that the evolution of remote work is likely to have a major impact on the future path of home values. 

To be sure, urban real estate has seen incredible growth, as well. 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. And there are signs that demand may be shifting back in favor of urban homes. 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. Annual suburban home value growth outpaced urban home value growth by about $7,250 in December, but only by about $4,820 in March.

The shift has been more pronounced in a few metro areas where suburban home values grew especially fast compared to urban home values in 2021: San Francisco, Columbus, Seattle and Boston. This may reflect home buyers reacting to employers’ return-to-office plans, realizing that the cost savings of a move to the suburbs are not as big as they once were, or sensing that competition may not be as stiff for homes in urban parts of the metro. 

Nashville and Raleigh are two notable counterexamples. In both metros, urban home values rose more than those in the suburbs in 2021. However, after the first three months of 2022, those positions have been reversed. In the year ending March 2022, the typical suburban home in Nashville gained $7,350 more than the typical urban home, and in Raleigh, the typical suburban home gained about $9,800 more. This could signal a shift in demand in these markets, with home shoppers searching for more-affordable options in the suburbs, especially as mortgage rates keep rising. 

In today’s hot sellers market, buyers should consider Zillow’s tips to win a competitive bid. Hiring the right local agent and embracing new real estate technology for a speed advantage can help during the home search. Securing mortgage pre-approval and using strategies such as submitting an offer before the offer review date can help an offer stand out.

Metro Area*

Typical Home
Value
Urban ZIP
Codes

Typical Home
Value
Suburban
ZIP Codes

Year-over-Year
Gain
Typical
Urban Home

Year-over-Year
Gain
Typical
Suburban Home

United States

$370,336

$357,996

$61,671

$66,490

New York, NY

$688,835

$544,108

$55,526

$65,936

Los Angeles, CA

$905,470

$948,317

$137,475

$169,508

Chicago, IL

$341,459

$309,615

$22,599

$41,607

Dallas–Fort Worth, TX

$293,570

$353,094

$56,492

$77,878

Philadelphia, PA

$211,265

$378,456

$18,846

$51,069

Houston, TX

$272,792

$287,285

$28,239

$51,467

Washington, D.C.

$714,771

$541,843

$52,550

$53,335

Miami–Fort Lauderdale, FL

$393,920

$444,785

$68,589

$103,244

Atlanta, GA

$492,263

$368,816

$71,327

$88,741

Boston, MA

$743,060

$616,492

$63,747

$80,943

San Francisco, CA

$1,418,570

$1,371,714

$193,540

$278,806

Detroit, MI

$83,303

$293,602

$10,316

$39,119

Riverside, CA

$475,287

$560,265

$97,397

$117,261

Phoenix, AZ

$382,429

$455,948

$83,115

$101,598

Seattle, WA

$920,417

$703,419

$119,725

$146,815

Minneapolis–St. Paul, MN

$341,401

$378,623

$21,713

$46,223

San Diego, CA

$863,279

$897,487

$169,404

$182,756

St. Louis, MO

$170,579

$262,916

$16,583

$37,397

Tampa, FL

$326,295

$350,842

$64,993

$88,867

Baltimore, MD

$206,654

$411,769

$30,627

$41,517

Denver, CO

$626,133

$648,161

$99,965

$133,444

Pittsburgh, PA

$206,463

$204,442

$23,167

$26,076

Portland, OR

$609,516

$571,485

$98,531

$95,092

Charlotte, NC

$372,480

$355,729

$85,076

$86,125

Sacramento, CA

$509,417

$642,351

$84,818

$112,775

San Antonio, TX

$229,030

$289,967

$38,967

$56,570

Orlando, FL

$320,717

$372,529

$69,311

$84,227

Cincinnati, OH

$220,523

$263,550

$27,602

$36,566

Cleveland, OH

$125,404

$238,068

$21,566

$31,917

Kansas City, MO

$140,102

$308,850

$29,480

$44,037

Las Vegas, NV

$358,548

$462,498

$88,477

$113,652

Columbus, OH

$190,021

$321,239

$28,783

$49,584

Indianapolis, IN

$146,728

$300,079

$27,300

$51,785

San Jose, CA

$1,830,251

$1,578,014

$363,464

$306,105

Austin, TX

$788,338

$568,729

$206,972

$169,059

Virginia Beach, VA

$272,157

$341,218

$35,385

$48,411

Nashville, TN

$533,667

$414,423

$95,178

$102,527

Providence, RI

$334,695

$437,477

$55,140

$59,375

Milwaukee, WI

$171,859

$348,543

$22,788

$37,235

Jacksonville, FL

$270,768

$341,887

$56,407

$82,769

Memphis, TN

$125,713

$289,145

$31,024

$47,847

Oklahoma City, OK

$165,917

$228,767

$28,951

$38,359

Louisville, KY

$159,209

$261,933

$17,142

$30,512

Hartford, CT

$193,774

$311,475

$30,211

$39,630

Richmond, VA

$328,946

$321,073

$25,633

$35,939

New Orleans, LA

$311,391

$226,472

$21,378

$28,257

Buffalo, NY

$151,441

$264,176

$25,727

$39,084

Raleigh, NC

$495,075

$466,419

$110,566

$120,373

Birmingham, AL

$71,735

$252,093

$15,121

$35,651

Salt Lake City, UT

$616,663

$584,399

$121,234

$133,642

 

*Table ordered by market size 

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life’s next chapter. As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and ease. 

Zillow Group’s affiliates and subsidiaries include Zillow®,, Zillow Premier Agent®, Zillow Home Loans™, Zillow Closing Services™, Trulia®, Out East®, ShowingTime®, Bridge Interactive®, dotloop®, StreetEasy® and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

 

SOURCE Zillow





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