Why the Wealthy Have Been Returning to City Centers

Back in 1980, Americans didn’t pay much of a premium to live in the center of a city. Quite the contrary: many gladly paid more to live farther away. The average price for a two- or three-bedroom home right in the central business district was about $100,000 (in 1980 dollars). That figure dipped a bit as you made your way out of town, but then it popped back up as you entered the suburbs. By the time you were 10 miles away, that home price was higher than it was downtown, and as you kept moving out it pretty much kept going up until you hit truly rural areas.

We all know how that story ends. In the years and decades that followed, center cities made a comeback, and demand for downtown living soared. By 1990, in America’s top cities, those average home prices were higher in the CBD than they were 10 or 15 miles away, according to U.S. Census data. By 2010 the gap was even greater, with city center prices 40 percent higher than periphery prices. The plunge and plateau of home prices by distance from downtown is the statistical equivalent of a black diamond ski slope: