Average home values in urban markets are now worth 2% more than those of suburban markets according to a news release from Zillow. This is the reverse of only a few years ago in 2013, when the average urban home was worth 1.2% less than the average home in the suburbs. Suburban home values increased nationally by 5.9% in 2015, while urban homes gained 7.5% in value.
This phenomenon is particularly prevalent in urban areas with young populations such as Boston, Washington, D.C., and Seattle, indicating that changing demographics within cities and new preferences are driving the value increase. Millennials are delaying family life and choosing to purchase urban condos, seeking walkable neighborhoods with urban amenities.
"This trend, in part, reflects home buyers' changing preferences, as they seek amenity-rich, dense and walkable areas that are often closer to their workplace," said Zillow Chief Economist Dr. Svenja Gudell. "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."
In some areas of the country, suburban homes are still worth more than urban ones. Suburban homes in Nashville, Tenn., Cincinnati, Ohio, and Richmond, Va., are more expensive than the average home in the city.