There’s a very precise formula for how major U.S. metro areas can make their housing markets “hot”; simply commit to jobs and population growth, then artificially restrain the housing supply. This has been the price inflation calculus in New York and San Francisco. But even within these and other desirable metros, the price variation across the geographic landscape is so disperse as to seem random–and counters the stereotypes about where consumers actually want to locate.
This is evident when looking at the “Heat Maps” on Trulia.com. These maps allow prospective homebuyers to see color-coded overviews of the price ranges across their desired metros. Areas shaded in red are ones where average listing prices exceed $1 million; orange areas are between $500-999k; yellow areas are between $350-499k; and green areas are $349k or less. Along with average listing prices, Trulia’s Heat Maps can be altered to show average sale prices, sale prices/sqft, valuations and rental prices.
What’s surprising about the maps is just how spiky and variegated they are, by neighborhood and by municipality. This would refute certain commentary that has been made about cities in recent decades. Thanks to the continued growth of major metros, center city areas are anecdotally thought to be places of high demand and pricing. Suburban sprawl, meanwhile, is viewed as the less desirable second option; something people choose only because it is cheaper and less burdened by regulation.
But neither of these sentiments are exactly true. While there are a lot of cheap suburbs, there are also many suburbs that are pricier on average than central cities, making them destinations unto themselves; and while much of central-city America is famously expensive, certain neighborhoods within even these hot markets remain surprisingly cheap.
The New York-Newark-Jersey City metro area, which likely remains America’s most analyzed housing market, is one case study. On its heat map, most of the blocks south of 110th street in Manhattan have average listing prices above $1 million (no surprise there). But then, the Long Island townships of Kings Point, Old Westbury and the Hamptons also have at or above this average price range, as do parts of southern Connecticut.
Meanwhile Brooklyn, for all the talk of whitewashing and gentrification, is really not much different than the rest of the metro. Some parts of the borough, especially close to Manhattan, average above $1 million. Other parts, especially those further from Manhattan, average around the metro area median of $411,000. But a majority of the borough contains the orange designation of between $500-999k. This isn’t cheap, but it doesn’t cause Brooklyn to stick out from other parts of the region; much of suburban Long Island, Connecticut and New Jersey is also like this. Meanwhile, various portions of New York City proper–namely The Bronx–have average listing prices below the metro area median.
A similar calculus applies to the Bay Area. A majority of San Francisco is of course shaded red. But so too is pretty much all of Silicon Valley (besides San Jose); the entire northern peninsula leading to San Rafael; and even some of the uber-suburban territory far east of Oakland. Meanwhile, various neighborhoods in San Francisco city proper have cheaper listing prices on average than the metro area median of $843,000, and this goes for almost all of the East Bay, including Oakland and Berkeley.
In other notably pricey metros, the most expensive areas sit outside the city proper altogether. This is the case in San Diego (La Jolla and Coronado); Washington, DC (Bethesda and Potomac); Los Angeles (Malibu, Santa Monica and the Hollywood Hills); Seattle (Bellevue and Mercer Island); Denver (Boulder); and Boston (western suburbs). It is also the case in metros with cooler housing markets, such as Phoenix, Oklahoma City and Chicago.