Near-Term Housing Demand Shifts from Suburbs Back to Cities

Asking prices rose 7.3% year-over-year for condos versus 6% for single-family homes, the latest Trulia report finds.

Condo prices rose faster than single-family home prices in 18 of the nation’s 20 largest condo markets. And condo prices are up more than 15% in Miami, Denver, and West Palm Beach.

“Although condo prices are outpacing single-family home prices, they are following similar patterns,” says Jed Kolko, chief economist at Trulia, in the report. “Condo prices and single-family home prices are both rising faster in metros with stronger job growth and those that had a more severe housing bust in the past decade. In fact, metros with bigger condo price increases also tend to have bigger single-family home price increases.”

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Apartment rents are also rising faster than for single-family homes.

Apartment rents were up 6.9%, while single-family home rents gained 5.2%. The multi-unit vacancy rate has been falling steadily, but remains elevated for single-family homes.

“Despite the multi-unit construction boom, the cost of living in these buildings is rising faster than in single-family homes – both for renters and buyers,” Kolko says. “This is not necessarily a sign of a permanent shift toward city living. But it certainly reflects a reversal from the past decade’s bubble, when demand was strong for single-family homes in the suburbs and beyond.”

Nationally, the month-over-month increase in asking home prices rose to .8% in September. Year-over-year, asking prices rose 6.4%, down from the 10.4% year-over-year increase in September 2013.

Asking prices rose year-over-year in 92 of the 100 largest U.S. metros.

Five of the 10 U.S. metros with the largest year-over-year price increases were in the South, including Miami, Palm Bay-Melbourne-Titusville, West Palm Beach, Birmingham, and Atlanta.

Read the report here.

Written by Cassandra Dowell

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