Homebuyers' Flight to the Suburbs Leads to Valuation Spike

The “flight to the suburbs” trend scored new data points with a Zillow report that homes in these outlying areas have been growing faster than those in urban areas since July 2021.

This marked a reversal from previous norms and from the first 15 months of the pandemic, the company said.

The availability of remote work has many buyers prioritizing affordability over proximity to the workplace, it said.

“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,” Zillow said in prepared remarks about its analysis of home prices. “This indicates stronger demand and fiercer competition.”

Suburban homes’ value rose $66,490 in the past year, compared to $61,671 for the typical urban home. San Francisco, Columbus, Seattle and Boston are markets that saw home values rise most.

“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,” Zillow economist Nicole Bachaud said in prepared remarks. “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.”

The National Bureau of Economic Research said remote work is responsible for more than half of the gain in US home prices since late 2019.