24 Jun Home Prices Climb Higher in Least Affordable Real Estate Markets
According to a recent report by Trulia, home prices are climbing higher in some of the least affordable real estate markets around the country. In May, asking prices around the U.S. climbed 9.5% year-over-year, however, in the 10 least affordable housing markets, prices jumped 16.3%.
What’s more, Trulia discovered that out of the 100 largest metro areas, 98 of them saw asking prices increase year-over-year. Seven of the least affordable real estate markets are right here in California. In San Francisco, households spend about 55% of their monthly income on a mortgage. But Honolulu, Hawaii trumps everyone. There, homeowners spend about 74% of their monthly income on their home payment. In the 10 least affordable housing markets in the U.S., homeowners spend at least one third of their income to pay for their home.
Jed Kolko, Trulia’s chief economist, says there are two reasons why this gap in affordability is important. Kolko says, “More people in expensive markets like California will look to relocate to cheaper markets like Texas when the time comes to buy. Additionally, the disparities in affordability make it more difficult to come up with ‘one-size-fits-all’ national housing policies as local markets become more different from one another.”
Oakland, California, the seventh most unaffordable housing market, saw housing prices spike 31.2% year-over-year in May. Eight of the least affordable real estate markets saw asking prices increase at a faster pace than the national average.
By contrast, the 10 most affordable metros saw asking prices average the same as the national rate of 9.5%. The most affordable metro of them all is Detroit, where just 8% of monthly household income is used to pay a mortgage. Atlanta, Memphis, Fort Worth, and Dallas also saw double-digit year-over-year gains in asking prices, however, they are all still among the most affordable big cities in which to purchase a home.