House Asking Prices Up 16% in Already High-priced Markets

Asking prices for homes in 98 of the 100 largest U.S. metropolitan areas are up an average of 9.5% year-over-year including foreclosed homes and 10.5% excluding foreclosures on a seasonally adjusted basis. Asking prices are up 1.1% month-over-month and 4% quarter-over-quarter. Perhaps more telling, asking prices are rising faster in some higher-cost, least affordable markets.

The three metro areas where asking prices are rising the most are all in California: Oakland (up 31.2%), San Jose (up 23.2%), and Orange County (up 21.2%). A mitigating factor to the rise in asking prices is the relatively low percentage of average monthly income that is needed to pay the homeowner’s mortgage.

In Oakland, a homeowner would pay about 37% of the area’s average monthly income for a mortgage. The percentage drops to 33% in San Jose, but jumps to 44% in Orange County.

In the San Jose metropolitan area, wages are notoriously high and home prices are equally notorious for their nosebleed levels. But at 33% of the average salary, the

In Honolulu, however, where the asking prices are up nearly 13% in the past year, a mortgage consumes 74% of average monthly income, while a mortgage in San Francisco eats up 55% of average pay.affordability of house in San Jose is the best among the 10 least affordable markets.

Based on a percentage of monthly income required to pay the mortgage, the most affordable houses are for sale in Detroit, where just 8% of an average salary will meet the monthly mortgage payment. Houston and Atlanta (12%) are next, followed by the Memphis area at 13%.

Rents have not been rising as fast, with the top year-over-year change in asking price up 6.4% in Miami. Rents are up 5.5% in Boston, 5.1% in San Diego, and 3.7% in New York City. But a New York rental consumes 58% of an average monthly income.

The data comes from Trulia Inc. (NYSE: TRLA) and the company says that its data on asking prices leads information on sales prices by about two months. Trulia’s chief economist notes two aspects of what he calls a “widening affordability gap”:

First, as local markets become more unequal, more people will consider moving from less affordable to more affordable areas. … Therefore, widening affordability gaps could cause more people to make long-distance moves to a more affordable local housing market. … Second, a widening affordability gap puts pressure on housing policy. It’s harder to come up with one-size-fits-all national housing policies when local markets are becoming more different from each other.