Homebuyers can still get more space for the money by buying in the D.C. suburbs, but not as much more now.
According to real estate firm Redfin, the price per square foot of residential properties in the D.C. suburbs rose an average of 7% in the past 12 months, while the average price per square foot in D.C.’s urban neighborhoods rose less than 1%.
“Over time, that premium that suburban areas command is just starting to decrease. It is not disappearing entirely, but it is giving you less bang for your buck in the suburbs than maybe two years ago, before the pandemic,” said Redfin Deputy Chief Economist Taylor Marr.
In September, the average price per square foot of a home sale in D.C.’s suburbs was $250, versus $360 in close-in urban areas.
Price per square foot is a useful tool for comparing price growth across different neighborhood types because it is a direct comparison of how the value of space is changing in one neighborhood type versus another.
Nationwide, Redfin found that space in suburban homes was worth more than space in urban homes in September for the first time since it started tracking that data. And, like the D.C. metro, price growth in other metro areas is falling much faster in urban areas than other types of neighborhoods.
It is one more thing that can be attributed to the pandemic, with more buyers flocking to suburbs for more space and work-from-home options pushing suburban prices up faster than typically happens.
In D.C., many suburban areas are becoming more urban, meaning buying in the right suburb can mean the best of both worlds.
“Even though there is demand for more space, people still like the amenities of urban neighborhoods. As people start to densify these suburbs, you are going to see them turn more urban with clusters of restaurants and bicycle lanes,” Marr said.
When home prices fall, Redfin expects them to fall in urban areas before they do in suburban and rural ones.
