Asking prices were up 9.5 percent across the country last month but more than 16 percent in some of the most expensive markets, quickly eroding home affordability in places like California, according to a new report from real estate portal Trulia.
In May, asking prices continued to increase steadily across the country, rising in 98 of the largest 100 metros, according the report. Seasonally adjusted, prices increased 4.0 percent quarter-over-quarter and 1.1 percent month-over-month.
Eight out of the 10 least affordable markets, with seven in California, are all showing double-digit asking-price increases making home affordability even tougher for would-be buyers. Orange County, Oakland and San Jose all had price increases of more than 20 percent, making these already expensive markets even less affordable. Prices are up 16.3 percent, on average, in these 10 least affordable housing markets.
"Home prices are rising fastest in the local markets that were least affordable to begin with," Jed Kolko, Trulia’s chief economist, said in a statement. "As the gap between the most and least affordable markets widens, more people in expensive markets like California will look to relocate to cheaper markets like Texas when the time comes to buy."
In Massachusetts, prices were up slightly less than the national average, with asking prices in metro Boston up 7.8 percent year over year. Prices in Middlesex County and Springfield were up a similar 7.6 percent, while Worcester asking prices were up 7 percent. The Massachusetts metro with the biggest jump in year-over-year asking prices was Peabody, with prices 10.1 percent.
Boston fared less well when it came to rents, however, with Boston-area rents up 5.5 percent compared to last May, far above the national average of 2.3 percent, according to Trulia’s report. Boston already ranks as one of the least affordable rental markets by the site’s measure.
Nationally, rents rose slower than asking prices in 23 of the 25 largest rental markets. Out of the 10 least affordable rental markets, five show increases below the national average, with California markets moving especially slow -San Francisco rents up 0.2 percent, Los Angeles 1.8 percent and Oakland 1.3 percent.
