Although home prices are rising faster in urban neighborhoods, population is growing faster in suburban neighborhoods. Consumer preferences and the aging of the population are tailwinds for suburban growth; so are falling oil prices if they stay low long-term.
Although home prices are rising faster in urban neighborhoods, population is growing faster in suburban neighborhoods. Consumer preferences and the aging of the population are tailwinds for suburban growth; so are falling oil prices if they stay low long-term, according to Trulia.
During last decade’s housing bubble, suburbs and rural areas grew much faster than cities. But briefly, early in the housing recovery, it looked like the long suburbanization of America might go into reverse.
For a moment in 2011, urban counties grew faster than suburban and rural counties. Since then, old patterns have returned. Suburbs are now gaining population faster than urban neighborhoods, even though home prices are rising faster in cities than in suburbs. And the trend seems likely to continue, according to Trulia.
To compare cities and suburbs, Trulia classified individual neighborhoods as urban or suburban based on whether or not most households live in detached single-family homes (see note on methods and data sources). This definition better reflects how residents describe their neighborhoods than do official city boundaries. That’s because many neighborhoods within big-city limits consist overwhelmingly of single-family homes and feel more suburban than urban.
In the recovery, the home-price rebound has been stronger in urban neighborhoods. Most of the overbuilding during last decade’s bubble involved single-family suburban homes, and the single-family vacancy rate remains elevated.
Comparing urban and suburban neighborhoods in the 100 largest metros over the past four years, urban home prices have consistently risen faster, or fallen less, than prices in suburbs. And, for the year 2014, the urban median asking price per square foot rose 8.1% versus a 5.7% gain in suburban neighborhoods.
However, during most of this period, suburban population growth has been faster than urban growth. In 2014, suburbs grew 0.96% and cities 0.85%, according to Postal Service data on occupied homes receiving mail. That’s not a huge difference, but it continues the trend of suburbs outpacing urban areas.
Click here to read Trulia's full report.
