While a suburb is an area just outside a city, an exurb is an area just outside a suburb. In fact, the exurbs are often called outer suburbs.
Exurbs aren't typically far enough out to be considered a rural area, but they often have a rural nature, such as having some acreage or farmland. Many homes in the exurbs are in developments similar to what you find in the suburbs, only the homes are usually more spread out in an outlying area.
As the suburbs have become more crowded, exurbs have become more popular. So does that mean you should invest in one?
Pros and cons of exurban homes
You want to invest in homes where you're likely to have the biggest market, and that's typically closer to an urban area or in city centers. The urban core of an area -- and many suburban areas -- offer amenities people need, such as proximity to work, shopping, entertainment, restaurants, good schools, hospitals, and public transportation.
The further out you go, there is less of a market for buyers or renters, meaning homes in an exurban area are more likely to be a tougher sell to both renters and buyers.
The market for exurban homes has been picking up, however, as more people work from home. Larger homes with lots of open space, less crime, and general peace and quiet, are appealing to many people. In addition, homes in exurb communities tend to be new-builds with all the newest home features, which is also appealing. However, homes in the exurbs often require a septic system and even a well for water, and a resident would likely need to drive quite a ways to find a supermarket or school. But exurban homes tend to be cheaper housing to buy, and the market for them has been increasing as of late.
The current trend is moving to exurbs
Even before COVID-19, MarketWatch reported that people were starting to move to the exurbs. Homebuyers, looking for an affordable home, needed to go beyond the suburbs. The situation has only intensified after the pandemic, as housing supply dropped to levels never before seen. Also, crime has gone up considerably in some cities, causing many to head out of town toward greener pastures.
The most recent data from Realtor.com shows that homes in the exurbs experienced price growth over the past year and the biggest increase in buyer interest.
The Millionacres bottom line
Most people don't enjoy being a car commuter for work. Whether a home in the exurbs will make a good investment largely depends on what the future holds regarding work-from-home opportunities, how expensive homes in the cities and suburbs become, and whether cities and suburbs become too dangerous with rising crime rates.
The exurbs present an investment opportunity, but the prices of homes are more volatile out there. Exurban communities, for example, were hit hard during the 2008 market crash. If you time things right and get a great deal, you might wish to invest in the exurbs, but generally speaking, it's a riskier real estate investment.