Urban Home Values Are Rising Faster Than Suburban Ones
Richard FloridaJun 25, 2013 1 Comment Shutterstock
There's been lots written about the movement of people, jobs and businesses to cities. Brookings demographer William Frey has documented higher rates of population growth in center cities than suburbs in a majority of metro areas. Alan Ehrenhalt dubs this " The Great Inversion," with cities displacing suburbs as the center of economic and population growth.
New data by Jed Kolko, chief economist at Trulia and Cities contributor, provides additional evidence of this urban shift using housing prices. Kolko tracked the annual change in housing prices based on Trulia data for both urban and suburban neighborhoods. He also looked at neighborhoods that have more multi-family housing and apartment buildings versus those with traditional single family detached suburban housing. And he tracked housing prices in racially and ethnically diverse neighborhoods as well as neighborhoods with larger concentrations of gay and lesbian residents.
Here's a quick summary of his methodology:
we looked at (1) price gains, based on the change in median price per square foot among all non-foreclosure homes for sale on Trulia, and (2) population growth, based on the U.S. Postal Service's count of occupied households in each ZIP code. Both measures are year-over-year, with prices through the end of May 2013 and population through mid-June 2013. We classify urban and suburban neighborhoods based on the kind of housing they have – urban neighborhoods are mostly condos, apartments, and townhouses, while suburbs have mostly detached, single-family homes – which we think is more accurate than using big-city boundaries
The key findings:
- Housing prices (based on the median asking price per square foot) were up 11.3 percent in urban neighborhoods, versus 10.2 percent in suburban neighborhoods.
- Housing prices rose even faster in "high-rise" neighborhoods, "where more than half the housing is in buildings with 50 or more units," which saw a 11.9 percent gain.
- Diversity pays when it comes to housing prices. Housing prices in "gayborhoods," where gay or lesbian couples make up more than one percent of households, rose by 13.8 percent in gay neighborhoods and 16.5 percent in lesbian neighborhoods.
- Housing prices rose by 14.3 percent in racially and ethnically diverse neighborhoods defined as those "where no group makes up a majority of the population."
The table below, from Kolko's data, shows urban versus suburban price gains in the 20 metros covered by the Case-Shiller Home Price Index.
| Metro | Urban home price change, Y-o-Y | Suburban home price change, Y-o-Y | Difference: urban minus suburban | | Detroit | 28.8% | 22.0% | 6.8% | | Phoenix | 27.2% | 22.1% | 5.1% | | Miami | 18.1% | 13.1% | 5.0% | | New York | 7.3% | 2.7% | 4.6% | | Boston | 10.1% | 6.1% | 4.0% | | Las Vegas | 33.8% | 30.0% | 3.8% | | San Diego | 20.8% | 17.3% | 3.5% | | Los Angeles | 20.6% | 17.6% | 3.0% | | Cleveland | 7.8% | 5.0% | 2.8% | | Tampa | 15.1% | 12.4% | 2.7% | | Portland | 15.7% | 13.1% | 2.5% | | Chicago | 8.8% | 6.6% | 2.2% | | Atlanta | 20.2% | 18.1% | 2.1% | | Washington, D.C. | 7.7% | 6.8% | 0.9% | | Denver | 11.6% | 11.1% | 0.6% | | Charlotte | 9.5% | 9.0% | 0.5% | | Seattle | 12.8% | 13.2% | -0.5% | | Dallas | 9.3% | 11.2% | -2.0% | | San Francisco | 18.9% | 21.4% | -2.5% | | Minneapolis | 9.1% | 11.7% | -2.7% |
Table data from Trulia
Urban neighborhoods outpaced suburban neighborhoods in 16 of the 20 metros. Not just the obvious suspects like New York, Washington, D.C., Boston, and Chicago, but metros like Miami, Detroit, Atlanta, Cleveland, and Phoenix.
These data suggest the urban shift in the housing market is real and that the places people desire most are denser, more mixed use, diverse neighborhoods. The flip side here is that these areas are getting pricier, with double digit increase across the board, and thus may be pricing out more people as well as potentially the very diversity that made them attractive in the first place.
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