In previous posts we have frequently talked of the many benefits of urban living, and in particular, the added benefit of living in a new modern home within a desirable urban community. We have also mentioned that smaller square foot homes are often necessary due to infill space constraints and a desire to manage the overall costs down. This in turn has the added benefit of reducing maintenance and typically leads to a more comfortable home.
Despite all this, we continue to find some people concerned over the perceived price premium that Urban homes may command, and the resulting incremental financial risk that this involves. The reality, however, suggests something very different. Contrary to intuition, owning a suburban home can actually be more financially risky! In fact, data emerging from Washington DC in recent years illustrates that since the economic down turn a few years back, that:
… for the most part, the zip codes where median prices have increased the most – by an impressive 25 percent or more – are within the DC city limits … or near rail transit. The zip codes where median sales prices have declined are predominantly in outer areas
Other cities have witnessed similar price trends, suggesting that investing in urban real-estate, despite the somewhat higher up front cost, represents a lower risk investment that purchasing in the suburbs. This trend is of particular importance to the Canadian market at this point in time, given the continued reporting by the Bank of Canada on price risk in the real-estate market.