City vs Suburbs – Rent vs Buy – New vs Resale

We’ve been teetering on the edge of an uncertain housing market for some time now. The Rent vs Buy decision has become even more debatable than ever. Wondering about the stability of home prices in certain areas has caused buyers to question their choice of locations, and erratic mortgage rates certainly don’t help in determining a comfortable price range.

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Renting versus buying a home has always been a complicated decision whereas city versus suburbs was more of a given based on convenience or even just preference, that is until recently. Rising rents in cities have driven more and more renters toward the suburbs in turn affecting suburban rental costs, and compelling renters toward homeownership. Even taking into consideration higher mortgage interest rates, renters are recognizing the value of investing in themselves rather than contributing to their landlords investment. This is where the New versus Resale back-and-forth arrises.

As I’ve pointed out countless times, lack of resale listings has been a problem for several years. Due to a shortage of labor and the growing cost of materials, home builders have had a difficult time making up for the inventory deficiency. In a recent post by staff at the Queen Creek Sun Times, there is cautious optimism about our 2024 Real Estate market. According to Butch Leiber, outgoing president of Phoenix Realtors Board of Directors. “There weren’t many bright spots in 2023. Interest rates dropped 1% in the last two months, and year-to-date median sales prices have been steady this year compared to last. However, the price per square foot is up 6% over last year.” The article goes on to say that the availability of housing is now being bolstered by a 38% increase in new construction, giving home buyers more to choose from. As interest rates drop, the economy stabilizes and home buyers return to the market, resale inventory is expected to follow.

Where do you stand on Rent vs Buy? On City vs Suburbs or New vs Resale?

— We offer a considerable Cash Back contribution toward your Closing Costs —
when you buy a New Construction home

Contributing to the Rent vs Buy and the City vs Suburbs discussions, RIS Media gives us substantive proof and precise numbers relating to rental costs in both Cities and Suburbs.

Rents Appreciating Faster in Suburbs as Demand Intensifies

Renters up against ballooning costs in sought-after cities have steadily spread outward for rent relief—but now, costs are climbing in areas outside of cities, too.

In fact, according to a recently released report by Zillow, rent appreciation is accelerating faster in suburban areas than urban ones, with the median rental cost in suburban areas up 2.5 percent year-over-year, while the median rental cost in urban areas is up 2.3 percent.

“Because walkable urban centers close to amenities are typically a big draw for renters, you’d expect rents to rise faster in the city than in the suburbs—which is exactly what we’ve been seeing until very recently,” says Dr. Svenja Gudell, chief economist at Zillow, “but a handful of factors are helping turn the tables and beginning to push suburban rents up at a higher clip. These include deteriorating rental affordability in expensive urban cores; new apartments, albeit high-end ones, opening downtown compared to relatively few in outlying areas; and preferences among some renters toward the space offered by single-family homes in the suburbs.”

The difference represents a shift from two years ago, when urban rental costs were up 5 percent year-over-year and suburban rental costs were up 3 percent. There are starker disparities in appreciation in in-demand urban areas and their suburban counterparts, including in Nashville, Tenn., and San Francisco, Calif.

“Rents themselves are still lower in the suburbs, but if demand keeps growing for suburban rentals and supply continues to lag, that will also start to change,” Gudell says. “As more formerly urban renters move to the suburbs in coming years, we’ll likely start seeing more apartment buildings and walkable amenities popping up in those communities.”