8 Housing Markets That Will Cost You an Arm and a Leg

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The housing market may be surging, but so, too, are home prices. In fact, Trulia trends reveal that year-over-year, prices are up 9.5 percent nationally and are higher than one year ago in 98 of the largest metros. Trulia economists use their Trulia Price Monitor and Trulia Rent Monitor to investigate how asking prices and rents are trending nationally and locally. A new report illuminates that would-be buyers in U.S. metros are especially squeezed by recent price gains, with eight metros reporting double-digit price gains in the past year.

Trulia’s chief economist, Jed Kolko, helped break down figures in his report and highlighted the 10 least and 10 most affordable metros. He created a measure of local affordability based on current asking prices and the most recent wage data available. Then, he estimated how far a typical worker’s wage in each area can go to pay the mortgage on a standard-sized home at current mortgage rates (3.8 percent), using local wages and local asking prices. He found that the mortgage payment relative to the typical worker’s wages varies significantly throughout U.S. metros.

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Today, we’re showing you a snippet of Kolko’s findings, so you know where not to look if you’re searching for housing in a metro and you’re on a tight budget. Here are the 8 metros with the least affordable housing markets that have reported double-digit price increases.

8. San Jose, California

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First on Kolko’s list of least affordable housing markets is San Jose, California. This marks the first of many California metros that will appear on the list. San Jose’s percent of monthly average wage needed to pay mortgage is distinctly lower than most other cities on the list at 33 percent. This is more than half of the figure that the least affordable metro posts.

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However, San Jose’s double-digit year-over-year percentage change in prices is what affords it its “least affordable” classification. Its year-over-year asking price gain is 23.2 percent, the highest percent change on our list, second only to its California neighbor that we’ll get to next.

7. Oakland, California

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And now we can discuss the U.S. metro with the largest year-over-year percent change in prices. The winner is Oakland, California, which posts a striking 31.2 percent price change. The metro not only surpasses San Jose in its price change, but its percent of monthly average wage needed to pay mortgage is also higher at 37 percent, reflecting an upward trend that will likely continue.

6. San Diego, California

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San Diego, San Jose’s neighbor to the South takes the #6 spot on the list. It has the same monthly mortgage payment relative to the typical worker’s wages, but its year-over-year percent change in prices is almost half that of San Jose’s at 16.8 percent. Located on the coast of the Pacific Ocean, California’s second largest city is guaranteed to make you pay up if you want to live there.

5. Los Angeles, California

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Although it might be expensive to live in this city, its asking prices don’t seem to be scaring residents away as Los Angeles is still the second most populous city in the United States, second only to New York City. The percent of monthly average wage needed to pay one’s mortgage in LA is 41 percent, and that number isn’t going down anytime soon. Its year-over-year percent change stands at 17.4 percent.

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4. Ventura County, California

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Unsurprisingly, another California metro is up next, and this time it is Ventura County. It, too, sits on the Pacific Coast and bears the same monthly mortgage payment relative to the typical worker’s wages as LA at 41 percent. However, its year-over-year percent change in asking prices is a full two percentage points lower, at 15.4 percent.

3. Orange County, California

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Next up: Orange County, California. Anyone who has seen television shows featuring this glamorous area is probably not surprised to find it in the top-three least affordable places to live. It is only roughly half the area of Ventura County, but its year-over-year percent change in prices is significantly higher at 21.2 percent. Its percent of monthly average wage needed to pay mortgage is also greater, at 41 percent.

2. San Francisco, California

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And don’t forget about Northern California. It’s expensive there, too. In fact, its leading metro boasts the title of the second least affordable housing market. San Francisco’s housing asking prices increased 19.6 percent year-over-year, and the percent of monthly average wage needed to pay one’s mortgage there is 55 percent, more than 10 full percentage points higher than that of Orange County’s. Still, the city by the bay is the fourth most populous in California.

1. Honolulu, Hawaii

Honolulu

And lastly, we can present to you the metro with the least affordable housing market. Surprisingly, it’s not in California. It’s in paradise. Although upon entering Honolulu, Hawaii, you may contend that you never want to leave, the percent of your monthly average wage that is needed to pay a mortgage in the metro may effectively convince you otherwise.

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Its jaw-dropping 74 percent is the highest on the list by far, and that figure isn’t going down. The housing market still indicates a 12.8 percent price increase year-over-year. Get leid, then get out.

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