Since February, pending sales have picked up in both urban and suburban areas, according to a new Zillow® analysis. But while there are signs of strength in key housing indicators such as rising home values, in both segments, there are a couple of market outliers: San Francisco and New York.
Bidding wars are driving prices up across the country, with year-over-year changes moving similarly across both the urban and suburban areas. This is largely being driven by an inventory drought that has affected much of the nation’s markets.
Regionally, there are some differences. In the Northeast, newly pending sales in urban areas have slowed more and haven’t yet recovered to the same level as the suburbs have. But urban homes in this region typically spend less time on the market compared to suburban properties.
At the local level, two market outliers become apparent: New York and San Francisco. In New York City, for-sale inventory in the five boroughs was up 6.1 percent from last August, while it’s down more than 25 percent nationally. And rental inventory here is up 63 percent YoY. San Francisco has seen an even bigger increase in new listings—for-sale inventory jumped 97 percent YoY, while listing prices decreased 4.9 percent.
“When you step back and look at the bigger picture, it seems that those writing off urban real estate have done so prematurely,” said Zillow economist Jeff Tucker. “There is some localized evidence of a softer urban market, particularly in the highest-priced markets, San Francisco and Manhattan, and an eye-catching divergence in sale prices, but no evidence of a widespread flight to suburban pastures. The primary issue in much of the country is the inventory drought, both urban and suburban, that’s failing to meet the surprisingly robust demand from buyers eager to lock in record-low mortgage rates.”
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