Downtown Deals: Most of USA’s Largest Cities See Slower Home Price Growth in City Centers

Unequal Growth & Remote Work Change Price Balance Between Cities & Downtowns

In the early 2010s, cities across the country started revitalizing decaying urban centers by reintroducing at least some residential component into areas that had become defined by commercial real estate in the decades of suburban flight. Often, they were advertised as areas for 24/7 lifestyles with shopping, restaurants, cafes, offices, and cultural venues within walking or biking distance.

Consequently, by 2014, downtown home prices in 11 of the nation’s 40 most populous cities were more than double that of the rest of the city with some truly jaw-dropping extremes. For example, downtown Philadelphia’s median sale price was nearly five times (490%) higher than the rest of the city.

Additionally, only nine downtowns had lower home prices than the city at large in 2014, including obvious examples — such as Fresno and Bakersfield in California — whose downtowns had complex challenges. After all, not all downtowns are created equal and not all cities had the budgets to fully or even partially revive urban cores. Then, COVID-19 hit and everything changed.

Today, residents of 17 of the country’s most populated cities can get a better deal on a downtown home than if they were to buy in the rest of the city. Unfortunately for many first-time buyers, the reason for that balance shift in pricing has generally not been the result of prices falling in American downtowns. Rather, home price growth in the city at large far outstripped central areas, despite significant gains in downtown home prices, too.

Curious how the number and spread of downtowns with lower prices than their respective cities has changed? Toggle between the two maps below:

As lockdowns went into effect, millions of office employees suddenly shifted to working from home across the country, while millions of service industry and retail workers were laid off as shops, restaurant and entertainment venues shuttered. Suddenly, all of the amenities that drew buyers to downtown areas disappeared. Then, as the pandemic persisted — along with remote work models, which later morphed into hybrid setups — buying preferences shifted from downtowns to more suburban areas and smaller towns.

That’s because prices here were often more affordable, homes were more spacious and lockdown measures were more relaxed than in large urban areas. Likewise, compact and pricey downtowns condos lost out compared to suburban or small-town homes that perhaps had space for a home office or small garden, thereby allowing for better work-from-home conditions and the ability to safely enjoy being outdoors.

Plus, this came as Millennials were already starting to shift away from more urban locations to suburbia pre-COVID, as older members of this cohort started families and needed more spacious homes.

With these shifts and conditions in mind, we analyzed 10 years of price growth between 2014 and 2023 across the 40 most populous cities in the U.S. Notably, we split NYC into Manhattan and Brooklyn and treated them as separate entities to better reflect market conditions in the five-borough city. As a result, our analysis included 41 locations — 39 of the most populated cities, plus Manhattan and Brooklyn.

What we found was that, in 31 downtowns of the 41 locations analyzed, prices grew at a slower rate than they did in the entire city (excluding its downtown area).

Key Takeaways:

• Home prices grew at a faster rate citywide than downtown in 31 of the 40 largest cities.
• Downtown median home prices were more affordable than the rest of the city in 17 of the 40 most populous U.S. cities, as compared to just nine downtowns in 2014.
• Kansas City, Mo., saw the widest discrepancy in price growth in the last decade: Downtown home prices grew 39%, while the rest of the city surged 122%.
• Fresno, Calif., led downtown growth nationwide at 188%.
• Downtown Philadelphia had the widest price gap compared to the rest of the city with homes in the city center four times as expensive
• Ten years ago, downtown LA was $38,000 more expensive than the city at large. Now, it’s $353,000 cheaper.
• Downtown Dallas experienced the widest swing after going from being 42% more expensive than the city a decade ago to currently 4% cheaper.

Citywide Price Growth Outstrips Downtown Price Gains in Kansas City, Mo.; Los Angeles; & More

Albeit an unexpected candidate, Kansas City, Mo., logged the widest gap of the 31 locations where the city’s median sale price grew at a faster rate than its downtown. More precisely, the median sale price in downtown KC grew 39% between 2014 and 2023, whereas the median sale price in the rest of the city more than doubled at 122%.

Like in many other large cities, the balance shift between downtown prices and city prices started in 2020 — the first year when home prices across Kansas City surpassed downtown price tags — and the gap has widened ever since. Beyond the generalized increase in home prices experienced by all large urban areas, Kansas City’s performance was influenced by the city’s growing population and robust employment growth.

Thanks to a very diverse economy, Kansas City was also more resilient to the pandemic than many other (and even larger) cities. Additionally, the deployment of millions of miles of Google Fiber has turned the city into the first gigabit region in the U.S., as well as contributed to Kansas City being named the #1 city for remote work by Icelandair in 2022.

Meanwhile, in Dallas, downtown homes prices jumped 64% in the last decade, but the rest of the city saw the median sale price surge 142% —the sharpest city-level price increase among the cities analyzed. Similarly to Kansas City, Dallas’ price growth was also influenced by a notable increase in population, a robust economy (further bolstered by the increase in corporate HQs) and a generally low unemployment rate.

However, Dallas is also confronting a large housing shortage: Non-profit buildingcommunityWORKSHOP estimated a 60,000-home deficit for low- and moderate-income buyers in 2023 with projections seeing those figures rise even further. On top of that, low- and moderate-income neighborhoods — neighborhoods that are not in the city’s urban core — experienced much sharper price increases than high-end areas. 

Even so, Dallas and Kansas City were just two of the nine locations where city-level price growth outperformed downtown price gains to the point where downtowns went from more expensive than the rest of the city to less expensive in just 10 years. Among these drastically changing cities, Los Angeles and Seattle saw some of the most extreme changes.

For instance, back in 2014, an LA buyer would pay a median $570,000 for a home in downtown LA (DTLA) and 7% less for one in the rest of the city. But, by 2023, the median price downtown had increased 10%, while the rest of LA jumped 84%. In fact, DTLA prices peaked in 2017, then contracted until 2021. Meanwhile, citywide, home prices continued to rise throughout the last 10 years.

As a result, downtown LA homes now sell for $353,000 less than properties in the city. Like Dallas, LA’s price increases were also majorly influenced by tight inventories across the city. That said, DTLA experienced a condo boom in the early aughts with new builds commanding higher prices at the time. When the housing bubble burst and the Great Recession hit, many units were left unsold, dampening price growth in the area.

The different rates of price growth were also affected by property mixes: While DTLA is dominated by condos, the rest of LA is characterized by single family homes, which generally command higher prices. Accordingly, with only about two-thirds of DTLA office buildings now occupied and its nearly six square miles dominated by commercial developments, Angelenos remains skeptical about any residential price surges in DTLA in the near future.

Further up the coast, Seattle was in a similar situation: Downtown homes sold at a median $570,000 in 2014, while homes in the rest of the city traded for $118,000 less. Then, in the last 10 years, downtown prices grew by nearly one-third, while residential prices jumped 87% across Seattle. As a result, the pricing balance shifted: Today, a Seattle home outside of the urban core costs $100,000 more than a downtown home.

In Seattle, population growth has been the main driver of price growth, in addition to the influx of tech workers exacerbating price increases. What’s more, the unequal price growth between downtown and city has been affected by more diversified development in other areas, such as the city’s waterfront and outer districts, like Ballard.

Of course, the pandemic also played a role by freeing downtown tech workers to move out of the urban core without dealing with extended daily commutes to downtown offices.

In any case, Seattle’s urban core maintained a price premium compared to the rest of the city until 2020, when it saw two years of price crunches before starting to rise again. At the same time, the rest of the city (similar to LA) grew unabated throughout the 10 years we analyzed.

Lower-Priced Downtowns Become Even More Affordable Compared to Their Cities

In some cities — like Minneapolis; Bakersfield, Calif.; and San Jose, Calif. — downtown areas were already cheaper back in 2014. And, although prices grew across the board in the 10 years since then, the faster rates of appreciation in the city at large further widened these gaps.

As an example, Bakersfield’s downtown was one-third cheaper than the city at large in 2014. By 2023, downtown Bakersfield prices rose by half, while the rest of the city jumped 77%. As a result, Bakersfield is now $145,000 more expensive than its downtown, compared to the $63,000 difference from a decade ago.

Here again, price growth in Bakersfield was also driven by population growth with new residents attracted by the lower cost of living (about 20%) compared to California. And, although researchers from the University of Toronto found that foot traffic in downtown Bakersfield exceeded pre-pandemic levels, that doesn’t mean that visitors are also looking to buy homes here.

Rather, most visit downtown Bakersfield specifically for work and otherwise spend little time in the city center due to the area’s low walkability and scarcity of attractions as many area business shuttered during COVID.

At the same time, San Jose’s price gap between downtown and city more than tripled in the last decade, fueled by strong growth in both downtown prices (76%) and the city at large (102%). Thus, San Jose became the only location where the city’s median sale price surpassed $1 million while its downtown stayed below.

Here, too, the downtown was characterized by commercial buildings and the daily influx of workers, many in the tech sector. Post-COVID, downtown San Jose continues to contend with high office vacancy rates — which, in turn, have maintained high retail and service industry vacancies throughout the area. As a matter of fact, many see downtown San Jose more like an entertainment district now, and city officials are pushing for more residential development to revitalize it. 

Not to be outdone, the difference between downtown and citywide prices shot up nearly tenfold in Minneapolis: In 2014, downtown Minneapolis homes sold at a median of $185,000, whereas a home outside of the urban core cost $10,000 more. A decade later, homes in the rest of the city were selling for $99,000 more.

Yet, as has been the case with many American downtowns since the pandemic and the widespread shifts it caused, downtown Minneapolis is also struggling with an abundance of vacant office space and overall dampened economic activity due to lower numbers of workers. Additionally, like so many other downtowns across the country, residents in downtown Minneapolis also struggle with walkability; lack of green spaces; and now fewer retail and restaurant options.

Moreover, although the city is actively looking to bring in more residential development and increase the overall appeal of the area to potential residents, downtown Minneapolis has proven unappealing to buyers in the last two years. To that end, the median sale price in downtown Minneapolis has decreased for two consecutive years — a notable change considering how much home prices have increased across the country since the pandemic.

Downtowns Maintain Pricing Edge, but Citywide Price Surges Shrink Downtown Premiums to as Little as $6,000

Stronger price growth outside of urban cores closed the gap between citywide and downtown prices in 11 locations. As an example, in Louisville, Ky., citywide prices increased at a much faster rate, thereby shrinking the pricing gap between city and downtown from $160,000 to $94,000 throughout the course of a decade. This came as the result of the city’s growing popularity, including being named as one of the best cities to move to in 2024.

It’s worth noting that Louisville has seen an influx of residents attracted by the city’s job market and overall lower housing costs in the last few years, which has put pressure on the local housing market and raised prices across the city.

At the same time, widespread remote work has allowed would-be buyers to venture further away from the city center, thereby slowing downtown price growth and speeding up appreciation in other parts of the city. And, like other large cities, Louisville also struggles with a car-centric infrastructure and a shortage of downtown amenities (such as adequate amounts of retail, especially grocery stores).

Across the country, residential prices also surged throughout Las Vegas, but downtown Vegas’ gains (+77%) were outdone by a significant margin by the rest of the city (+117%). Therefore, a buyer might spend $435,000 on a downtown Las Vegas property today and just $31,000 less elsewhere in the city. In this case, a tight housing market with low supply and an influx of out-of-state buyers continues to raise prices across the city.

At the same time, Uptown Charlotte home prices rose by half throughout the last 10 years, but citywide prices shot up 126% in the same period. Furthermore, although Uptown Charlotte remained pricier than the rest of the city, the price gap narrowed by almost one-third. More precisely, buyers paid $171,000 more for a downtown home in 2014, but downtown price premiums have narrowed to $120,000 since then.

Similarly to Louisville and Las Vegas, Charlotte’s price growth is driven by in-migration with a significant bulk of residents moving from cities with much higher costs of living and housing, including New York and Miami. Not only that, but the bulk of new residents tend to be young professionals and young families, usually with higher levels of education and more financial means, which allows them to spend more on homes.

What’s more, the city has a vibrant and diverse economy with high-paying industries like banking that have provided a higher level of pandemic resiliency and sped up in-migration. In the same way, corporate relocations (as well as population migration) have also increased, especially in the immediate aftermath of COVID lockdowns. Of course, Charlotte’s mild climate and lower-than-the -national-average living costs have also proven to be further attractions for new residents. 

In other locations, price gaps narrowed even more drastically as city-level price growth outdid downtown trends. Namely, in Washington, D.C., the gap between downtown prices and the city effectively disappeared: Whereas Downtown D.C. buyers paid $161,000 more for a home in the city center back in 2014, today, they would spend just $6,000 more for a home in the capital’s center. This was the result of a 31% increase in the city’s median sale price and a 1% downtick in downtown price levels. It’s worth noting here that the downtowns of D.C. and Chicago were the only ones where prices contracted.

As has been the story in many American downtowns, the D.C. core was also hit hard by the pandemic, and city leaders recognize that the capital’s center is not going to return to pre-pandemic conditions. Plus, despite pressure from political leaders to mandate full returns to office work for government employees, workers generally operate in hybrid model, as do employees from other sectors.

Moreover, much of downtown D.C. is made up of commercial buildings that are unsuited for redevelopment, especially residential conversions. And attracting permanent residents downtown is widely seen as the solution to avoid a return to the empty urban core of previous decades.

At the same time, the gap between Boston and its downtown decreased from $569,000 to $488,000 after the downtown median sale price rose only 17% in the last 10 years as home prices in the rest of the city increased by more than half. In particular, downtown Boston closed 2023 with a median sale price of $1.2 million, whereas the rest of the city remained nearly half a million cheaper.

Although the pricing gap between downtown and the city at large has shrunk, both remain some of the most expensive in the country and are expected to continue to rise. The city also weathered the economic effects of the pandemic well due to its diverse economy and strong life science sector with even the city’s office segment faring better.

Expensive Downtowns Bucking Trends: Brooklyn & OKC Centers Now Nearly $500,000 Pricier

Overall, there were only six locations (representing five cities) where downtowns were more expensive in 2014 and the price growth of the last 10 years was stronger in the urban core, too. First, Detroit was the only location where the city’s median sale price remained in five-figure territory ($64,000), despite more than doubling in the last decade. However, downtown Motor City shot up at even more impressive 128% to reach $248,000. Accordingly, the price difference between downtown and Detroit increased to $184,000.

Considering Detroit’s complex challenges, this was to be expected: Residential prices outside of the city’s core have been depressed for decades. At the same time, despite significant fluctuations year-over-year, downtown Detroit has seen robust growth through concerted efforts to revitalize the area and attract residents.

Interestingly, though, while prices across the city grew steadily throughout the last decade (including during the pandemic years), downtown Detroit prices actually shrunk in 2021 and 2022. And, although 2023 put the city center back on track with prices yet again on the rise, its $248,000 median sale price was still below the $262,000 peak it reached in 2020. 

Not to be outdone, Oklahoma City (OKC) and Brooklyn went even further as their downtowns put an additional $300,000 price difference between them and the rest of the city. That meant that downtown Oklahoma City reached a median sale price of $690,000 in 2023, which was a dizzying $490,000 higher than the rest of the city. OKC’s high employment rate and overall job market health — along with a cost of living below the national average and below similarly sized coastal metros — has led to it being named the #3 city to move to this year, per Forbes.

However, locals are starting to feel the pressure of population growth, especially as out-of-state investors compete with would-be homebuyers — meaning prices will continue to grow. Additionally, it must be noted that while downtown OKC has been historically more expensive, prices have skyrocketed since the pandemic. Specifically, downtown OKC stood at a median sale price of $261,000 in 2020, only to surge to nearly $700,000 in 2023.

At the same time, Downtown Brooklyn almost doubled in price in the last 10 years, while the rest of the borough rose by just more than half to widen the gap by $360,000. As a result, Downtown Brooklyn closed 2023 with a median sale price of $1,268,000 — a whopping $518,000 higher than the rest of the borough.

Nearby in Manhattan, that pricing gap was somewhat lower at $387,000, but was still nearly $100,000 wider than a decade ago. However, the growth rates of Manhattan and its downtown core were close in range, and both Downtown Manhattan and the rest of the borough had median sale prices north of $1 million. San Francisco was the only other location with a similar pricing balance.

On top of that, San Francisco was the only city among the country’s 40 most populous where downtown price growth was strong enough to surpass the rest of the city. More precisely, downtown San Francisco had an $800,000 median sale price in 2014 and the rest of the city was 8% more expensive.

But, while the city (excluding its downtown) appreciated 41% during the last decade, the tech hub’s downtown jumped 88% to lift the urban core’s median sale price to $1.5 million. As a result, downtown San Francisco is now $265,000 (or 21%) more expensive than the rest of the city, as well as the most expensive downtown among the country’s top 40 cities.

Of course, considering the struggles San Francisco has been facing since the outbreak of the pandemic, the downtown’s evolution may be surprising. However, downtown San Francisco is a relatively small area with fairly low residential stock, which means that every sale — especially the more expensive ones — has an outsized effect on price trends.

Explore the table below for the full picture of how prices have changed in 40 of the most populous U.S. cities and their downtowns between 2014 and 2023:

Methodology

To determine the yearly median sale prices for each city, we looked at all residential transactions for single-, two-, three- and four-family homes; condos; co-ops; as well as row- and townhouses. All package deals were excluded. The same criteria were applied to calculate the median sale prices for each downtown area, defining downtown boundaries according to proprietary PropertyShark maps.

We studied 40 of the 50 the most populous cities in the contiguous U.S., excluding the following 10 cities due to insufficient data availability for the full 10-year period analyzed: Mesa and Tucson in Arizona; Oakland, Calif.; Colorado Springs, Colo; Tampa, Fla.; Wichita, Kan; Raleigh, N.C.; El Paso and Fort Worth in Texas; and Virginia Beach, Va.

Additionally, we analyzed Brooklyn and Manhattan separately (instead of NYC overall) to better reflect market conditions and due to the unique characteristics of the city’s five boroughs. As a result, this study includes 39 of the 50 most populous U.S. cities, plus the NYC boroughs of Brooklyn and Manhattan.