A fall study comparing price-per-square-foot costs found the highest increase in urban areas of Fla., notably hurricane-hit Cape Coral, North Port and Tampa.
SEATTLE – As home prices fall fastest in cities and mortgage rates rise, the value of a square foot in the suburbs has caught up with that of urban centers, according to a report from Redfin. Price per square foot is considered a valuable tool for comparing price growth across different neighborhood types because it’s a direct comparison of how the value of space is changing in one neighborhood type versus another.
The typical home in suburban neighborhoods nationwide was worth $206 per square foot during the four weeks ending Sept. 25, just slightly higher than $205 in urban neighborhoods.
In urban neighborhoods nationwide, price per square foot increased 3.5% year over year– up from a year ago but down significantly from its pandemic peak. It’s smaller than the 9.5% growth in suburban areas and 8.4% (to $180) in rural areas.
Per-square-foot price rose most in Florida city centers
Price per square foot increased most from a year ago in urban parts of Florida, especially in places hit hard by Hurricane Ian in September, Redfin found.
In urban neighborhoods in Cape Coral, price per square foot rose 31.4% to $278 in the 12 weeks ending September 25. The top increase list includes:
- Cape Coral – 31.4% to $278
- North Port – 27.9% to $444
- Lakeland – 25.1% to $201
- Tampa – 22.4% to $272
- Fort Lauderdale – 22.2% to $300
- Orlando – 19.3% to $219
Cape Coral, North Port and Tampa were among the places with the nation’s highest price growth last year as scores of homebuyers move into coastal Florida from other parts of the U.S. The area is popular with remote workers, retirees and second-home buyers, even though it faces a high risk of climate-related disasters such as hurricanes.
National changes
The typical home in urban areas nationwide sold for $310,000, up 2.7% from a year earlier. That’s compared with a 6.6% increase to $385,000 in the suburbs and 4% to $333,000 in rural neighborhoods. Homes are least expensive in urban areas because they’re typically the smallest.
Although space now costs just as much in the suburbs as it does in urban neighborhoods, moving farther from city centers has historically meant that homebuyers could get more space for their money. That mindset is still common, and today’s house hunters are searching for deals as high mortgage rates, inflation and high home prices cut into their budgets. Another reason why price growth is slowing particularly fast in cities is because it rose so much last year.
“Urban neighborhoods will likely see prices – and price per square foot – fall on a year-over-year basis before suburbs and rural areas,” says Redfin Senior Economist Sheharyar Bokhari. “House hunters may want to shift their search to urban neighborhoods, where they may find lower prices to help counteract the costliness of today’s mortgage rates. And now that space is just as valuable in the suburbs, it’s less likely that they’ll sacrifice space.”
© 2023 Florida Realtors®
©Florida Realtors®
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