Suburban Home Prices Move Higher as Buyers Get Out of Town

Nationally, home prices in the suburbs have moved 3.2% higher since March compared to an overall 2.3% within cities, according to a realtor.com analysis. In South Fla., however, prices in urban areas declined 2.2% since March, while suburban prices are up 0.3%.

SANTA CLARA, Calif. – A pandemic-era push from cities to suburbs indicates a higher rate of price increases in areas outside U.S. cities. While housing markets in both suburban and urban areas recovered rapidly post-COVID shut down, suburban markets had more interest from home shoppers, stronger improvement of price growth, and quicker home sales than urban areas this summer, according to an analysis by realtor.com.

“In one of the most seismic shifts to the U.S. workforce since the introduction of the internet, many U.S. workers now have the flexibility to work remotely and choose where they want to live,” says realtor.com’s Chief Economist Danielle Hale. “Data shows in our post-COVID world there’s a strong preference towards a suburban lifestyle with its bigger houses, backyards and quiet streets. But American cities are not becoming ghost towns anytime soon; in fact, they are also seeing an uptick of homebuyers, it’s just not as strong as the surge we’re seeing in the suburbs.”

Price growth

• Historically, home prices have grown faster in urban areas than suburbs, but suburban prices have accelerated 3.2% since the first week of March – the general start of the pandemic – compared to an acceleration of only 2.3% for urban areas.

• Within the nation’s top 10 largest metros, the median listing price of suburban properties is now up 5.2% over year-to-year; in urban areas, it’s up by only 2.4%.

Time on market

• At the peak of the pandemic in April, the time a typical property spent on the market spiked in both suburban and urban areas. Following the real estate freeze, the time it took to sell a suburban home recovered faster. Suburban homes spent only 28.5% more time on the market in early May compared to last year, whereas urban homes spent 34.1% more time on the market.

• As the housing market accelerated in the summer months, properties began to sell at an unprecedented fast-pace in both suburban (11.4% faster year-to-year) and urban areas (8.0% faster).

• This difference between urban and suburban homes was even more pronounced within the nation’s top 10 largest metros. Suburban homes spent 16.2% less time on the market compared to last year, while urban homes spent 10.4% less time.

“Based on the rising popularity of the burbs, some buyers might think they can catch a break by searching in the city, but unfortunately that’s not the case,” says Hale. “Rising home prices and fast home sales are everywhere. If you’re a buyer in today’s market, finding and closing on your dream home is not going to be easy.”

Number of listings

• Currently, the number of suburban homes for sale is down 41.3% compared to last year, while urban homes for sale are down 34.3%. This divergence in available homes began in early April, during the peak of the COVID-19 shutdowns, and has continued to accelerate since.

• Within the nation’s 10 largest metros, the divide in the number of suburban and urban listings is even greater; the number of suburban homes for sale are currently down 40.2% compared to last year, whereas suburban homes are down 13.4%. See chart below for metro specific data.

Only one Florida metro area made the top 10 list of cities analyzed by realtor.com. In South Florida (Miami-Fort Lauderdale-West Palm Beach), listing price growth in urban areas was down 2.2%, while it was up 0.3% in the suburbs. Listing inventory was down 3.9% year-to-year downtown, but it was down 20.6% in the suburbs. In addition, the time a home spent on the market was up 4.5% in urban areas but down 5.9% in the suburbs.

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