City living is in vogue and market changes are reflecting that trend, with urban home values accelerating faster than suburban home values.
A Zillow study examining home values of ZIP codes across the U.S. defines areas as urban, suburban, or rural based on how survey respondents describe their neighborhoods.
The survey found that the 2015 Urban Zillow Home Value Index (ZHVI) was $269,036, compared with the 2015 Suburban ZHVI of $263,987. The one-year and five-year changes were also larger: Urban home values rose 7.5 percent from 2014 to 2015 and 28.4 percent from 2010 to 2015, compared with 5.9 percent and 21.1 percent, respectively, for suburban homes.
Several cities have seen urban values surpass suburban values, including Boston ($440,869 2015 Urban ZHVI), Washington, D.C. ($425,611), and San Francisco ($927,890). Hot cities such as Denver (14.4 percent), Portland (12.5), and Seattle (11.4) have experienced large Urban ZHVI increases over the last year, and urban values in San Jose (73.7 percent), Phoenix (64.6), and Las Vegas (62.7) have risen substantially over the last five years.
These increases are due in part to factors such as redeveloped downtowns and the availability of high-end urban condos. Also, Millennials are delaying starting families (and moving to suburbia) and are choosing to live in the city. “This trend, in part, reflects homebuyers’ changing preferences, as they seek amenity-rich, dense, and walkable areas that are often closer to their workplace,” Zillow chief economist Dr. Svenja Gudell said in a statement. “In the future, this lifestyle trend will change some suburbs as we know them, and they’ll start to feel more urban as buyers move further from city centers in search of affordable housing in communities that still feel urban.”
