Why Are Home Prices Rising So Fast In US Cities?

Performance Property Real Estate Question

Q: Why are home prices rising so fast in US cities? Cheryl, Austin, Tx

A: As more people prefer living in urban areas, builders are running out of lots to build on in places that people want to live. Also, zoning rules tend to permit high density construction in cities more so than in the suburbs and more rural areas. This pushes up the price of land in urban areas. With land more costly, developers try to compensate for higher land prices by building high-end more expensive condos and apartments that are more profitable which continues to feed the cycle.  At the end of the day, real estate pricing ultimately boils down to supply and demand.

So, what’s the fix for skyrocketing home prices in cities? One thing that might help is for people to push politicians in less urban areas to rewrite zoning rules to allow for more construction and for more varied construction. In many outlying areas, zoning ordinances restrict developers to building single-family homes on big swaths of space rather than more affordable and densely constructed property as is currently demanded more and more by both millennials and retiring baby boomers.

Thanks for your question, Cheryl, good luck. For more real estate information and tips, visit my blog at