Home prices are rising faster in the suburbs: Zillow

Relocation patterns caused by increased remote work have made it easier to purchase a home in the city than one in the suburbs during the current spring buying season, according to an analysis by Zillow. The online listings portal and brokerage attributes this to different speeds of price appreciation in each area.

The typical suburban home added $66,490 in value in the past year through March, almost $5,000 more than the $61,671 for the typical urban property, narrowing the gap between the two locations.

That is a change from the eight-year period running from January 2013 — when home values began to recover following the housing crash — through last June, in which urban homes generally recorded faster appreciation than their suburban counterparts.

It doesn't mean things are getting any easier for those looking to buy a property in the city as the inventory shortage continues no matter where a property is located.

"While urban home value gains have continued to accelerate, the suburbs are even hotter, showing just how strong demand is for limited suburban inventory," Nicole Bachaud, an economist at Zillow, said in a press release. "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, in recent months, the spread between suburban and urban price growth has been shrinking. Annual suburban home value growth outpaced urban home value growth by about $7,250 in December, but trended down to about $4,820 for March, Zillow said.

Suburban home prices have been accelerating faster than either urban or rural. But values in all three locales are growing much faster in March 2022 than they did one and two years prior.

Suburban prices grew by 20.3% in March, compared with 10.9% for the same month in 2021 and 3.5% in 2020. Over the same time frame, urban prices increased by 17.3%, 10.2% and 3.7%. Rural property prices rose by 16.2%, 9.6% and 3.8% respectively.

Nationwide, the typical home price in an urban ZIP Code remains higher than in the suburbs, at $370,336 versus $357,996.

But in some markets, suburban values are higher than those in the related urban area. The nation's 10 largest metros are evenly split on whether the urban area or suburban area had higher prices in March.

New York, Chicago, Washington, Atlanta and Boston all have higher prices in the city ZIPs, while home values are higher for the suburban areas around Los Angeles, Dallas -Fort Worth, Philadelphia, Houston and Miami-Fort Lauderdale.