In Sunday night’s presidential debate, Republican candidate Donald Trump mentioned “inner cities” 10 times with descriptor words like “disaster” and “devastating” tied to the status of these urban areas. Naturally, it is assumed that when neighborhoods decay, home prices will subsequently fall. According to a recent report from Redfin Chief Economist Nela Richardson, though, in looking at home prices in the “inner cities” of most major U.S. metro areas, it has been shown that the opposite trend is occurring.
Richardson reports that instead of falling, the median price per square foot of homes sold in the inner cities of 31 major metro areas has jumped 52 percent over the last six years. This has actually outpaced price growth in the surrounding metro areas by 18 percentage points. Richardson says that the only inner cities where price growth has fallen behind that of the surrounding metro area are Chicago, Houston and Miami.
Additionally, not only have inner cities seen stronger price growth in the past five years, but it was found that inner-city homes tend to cost 92 percent more per square foot than homes in the surrounding metro area. For example, Richardson cites Boston where a typical inner-city home costs more than twice as much as a typical home in greater Boston. She reports that only seven of the inner cities examined in the analysis show homes being less expensive than those farther out.
The concept of the inner city has changed radically since the 1970s when central districts were synonymous with crime and poverty, according to Richardson. Cities have undergone an economic and cultural Renaissance in recent years and this has led to the trend seen where the urban core of a city is the popular and highly demanded place to live and to work. In addition, new light-rail infrastructures have been built in many inner-city areas, and likewise the high-paying jobs are tending to be located downtown instead of in suburban office parks.
Richardson notes that this not to say that people aren’t struggling, but she added that Donald Trump’s picture of the urban core doesn’t match her analysis of the trends currently seen in real estate market.