Maybe you’ve heard: The pandemic is killing cities, fueling a rush to spacious houses in the suburbs. But beyond pricey New York and San Francisco, real estate demand is booming in downtowns across America.
From Pittsburgh to Detroit and Phoenix, condos and townhouses within stumbling distance of bars and restaurants are hot. Like the families now upgrading to bigger suburban homes, young white-collar workers are taking advantage of record-low mortgage rates and flexible remote-work policies to move to desirable cities with relative affordability.
Home prices in urban U.S. markets rose 15% in the three months through late January, slightly ahead of the annual pace in suburbia, according to data from brokerage Redfin, based on geographic designations developed by the Census Bureau. It’s a shift from early in the pandemic, when prices were lagging behind outer areas or even falling, a sign that Covid-19 vaccines are helping to fuel demand as nightlife makes its return.
“People are anticipating that now is a great time to buy,” said Daryl Fairweather, chief economist at Redfin. “They’re not thinking about the short term. They’re looking forward to eating inside restaurants and going to concerts.”
Perhaps no part of the U.S. economy has been buoyed by the Federal Reserve’s easy-money policies more than housing, and with cities now joining the suburbs and exurbs in the boom, the impact on growth appears to be broadening. In some regions, urban areas are now substantially outperforming.
In Louisville, Kentucky, values for properties in the more densely populated neighborhoods surged at more than twice the rate that they did in suburbs over the past three months. Detroit, plagued by poverty but home to a downtown packed with gleaming new condo towers, saw urban prices soar 43%, almost quadruple the rate of less-dense parts. In urban Baltimore, prices jumped 34% while they rose 10% in outer areas.
Newly divorced, Alec Studstill, 36, relocated to Baltimore from the Washington, D.C., suburbs during the pandemic. After losing out on a few places because his offers weren’t competitive enough, Studstill paid about $500,000 for a row house near the Canton waterfront. That was right around the asking price.
“My lifestyle’s a little more active than it used to be,” said Studstill, a management and program analyst with the Securities and Exchange Commission. “I wanted that city and urban lifestyle, but real estate in D.C. was ridiculous. Baltimore was the next big thing.”
Cities such as New York, San Francisco and Boston—major urban centers with expensive housing relative to the rest of the country—are among the outliers. Buyers no longer feel justified paying top dollar for a tiny space when theaters and bars are closed, and denser cities depend on public transit that’s unappealing during a pandemic.
Long-term remote-work policies also mean there’s no need for some people to stay close to industry hubs, though they still may want the perks of urban living. Transplants from those places are instead going to areas such as Austin, Texas; Boise, Idaho; and Columbus, Ohio, where they can live comfortably, for less.