A lack of starter home inventory and the demand for homes in city centers have been cited as reasons for the price increases
NerdWallet conducted a study and found that, when calculated as a percentage, the smallest quartile of homes appreciated faster than larger homes in 17 of 20 of the largest metro areas in the U.S. over the last three years.
Home sizes were based on square footage relative to the median home size in each metro. The median annual growth rate of the smallest group of homes was 8.9 percent from 2013 to 2016.
A lack of starter home inventory and the demand for homes in city centers have been cited as reasons for the price increases. Houses in urban areas tend to be smaller.
The two metro areas with the fastest rate of price appreciation among the smallest homes are both in Florida. Miami-Fort Lauderdale-West Palm Beach saw the most drastic growth, as the smallest quartile of homes appreciated by 19.5% each year from 2013 to 2016.
In terms of absolute dollar amount, though, larger homes appreciated the fastest. While the smallest homes had price gains of $57,535 on average from 2013 to 2016, the largest homes appreciated $99,790, on average.