Austin-Round Rock Suburb One of Best Suburban Hotspots in the U.S.

Nationally, strong demand in the real estate market has resulted in active home listings falling by 11% and prices increasing by 10% year over year, as of January 2016. This trend is straining the affordability of homes in markets across the county. Suburbs, which provide more affordable housing options for families and first time home buyers, often gain increased interest from prospective home buyers under these kinds of market conditions.

According to Jonathan Smoke, realtor.com’s chief economist, “suburbs are traditionally viewed as a mecca for young families, willing to trade in shorter commute times and urban nightlife for better schools and larger homes, but the relationship between the suburbs and urban areas is far more intertwined. In recent years, rising home prices and inventory shortages in urban centers have made affordable suburban home prices more appealing for buyers. Our analysis indicates 50 percent of buyers planning to purchase a home this spring indicated they preferred a home in the suburbs.”

Metros with Suburban Hotspots

Within the selected 50 metros, listing prices grew at an annualized rate of 6.7% in the suburbs and 9.0% in urban areas between 2013 and 2016. The fact that urban areas are outpacing suburban areas in price growth may have contributed to the strong household growth within the suburbs, which grew by 7.9% from 2010 to 2017, compared to 6.6% growth in urban areas. However, the median hotness score for suburban and urban areas was similar over 2016, with suburban zip codes having a median hotness score of 70.7 and urban zip codes having a slightly higher score of 73.2.

Metros in which suburban household growth outpaced urban household growth the most included Austin, San Antonio, Oklahoma City, Jacksonville and Houston, which saw suburban areas grow by 18% to 27% between 2010 and 2017, compared to growth rates of 7% to 16% for urban areas.  Suburban population growth exceeded urban population growth in 33 of the 50 metros.

Table 1: 2010 to 2017 Percent Household Change

Top Suburban Zip Codes

Realtor.com created a composite score of the household growth, listing price growth and market hotness metrics to identify the top suburban zip codes within the 50 metro areas. One zip code was included for each metropolitan area and the results are highlighted in Table 4 below.

The top suburbs in the country have cultivated the right conditions and attracted significant volumes of buyers from nearby and distant areas, resulting in strong household formation over the last few years. This has turned into insatiable demand for homes in what are now very shallow levels of supply, resulting in abnormal levels of price appreciation and competition amongst buyers. In most cases, the magnetizing power of suburbs has come from spillover demand in the urban cores, as truly unique lifestyle offerings and relief to affordability constraints.