In some hot real estate markets around the country, like Denver or Austin, home values in the highest price tiers and the lowest price tiers have risen relatively evenly. But these places may be the exception to the rule, as most of the country’s most dynamic urban areas are experiencing housing recoveries that are benefitting people that are already better-off than most, The Washington Post reports.
Between 2004 and 2015, the average home price in the most expensive zip codes of major U.S. cities rose 21 percent. The other 90 percent of zip codes saw increases that were cut nearly in half, at just 13 percent. What this means, is that families and individuals that already earn more than the rest are also coming out on top in the real estate game.
However, it isn’t that the homes are bigger or have undergone extensive, high-end renovations that is causing the steep rise in prices. It’s simpler than that; the most expensive zip codes in the country are more desirable to live in and, as such, people are getting into bidding wars and driving up the prices in an effort to get a piece of that exclusivity.
As the recovery has occurred more rapidly in more expensive zip codes, people who held onto their homes during the housing crisis were able to sell them for two or three times what they paid, meaning they would then have more money to outbid others and buy a new home in an expensive, exclusive zip code.
The city of Charlotte is a perfect example of a city where this is happening. Market values in zip codes that already had the most expensive homes have risen 31 percent since 2004. The other 90 percent of zip codes have only seen their home prices grow by 15 percent. As one real estate agent in the Charlotte area said, it isn’t the house that is driving up these prices, it’s the dirt. In other words, it is the lot the house stands on in the select neighborhood that is what is important.