Report: Home Prices Rise in 94% of Metro Areas

Home prices continue to rise faster than wages in a majority of Metropolitan areas, according to the latest quarterly report by the National Association of Realtors® (NAR).

According to the report, in the fourth quarter of 2019, single-family home prices increased in 94 percent of the measured markets when compared to the fourth quarter of 2018.

And it’s not just small increases.

The national median home price for an existing single-family home jumped 6.6 percent from the same time a year earlier going from $258,000 to $274,900.

“It is challenging – especially for those potential buyers – where we have a good economy, low-interest rates, and a soaring stock market, yet are finding very few homes available for sale,” said Lawrence Yun, chief economist for NAR. “We saw prices increase during every quarter of 2019 above wage growth.”

Housing availability is also an issue.

According to the report, just 1.4 million existing homes were available for sale, which was a precipitous drop of 8.5 percent from 2018.

That’s 3.5 months’ supply, which is down from four months’ supply 12 months earlier.

Ten percent of the metropolitan areas measured by NAR saw double-digit price growth in the fourth quarter, with Trenton, N.J. seeing a price spike of 18.2 percent.

Other notable double-digit increases include Boise City-Nampa, Idaho (13.7 percent), Gulfport-Biloxi, Miss. (11.8 percent) Kingston, N.Y. (11.2 percent), and Albuquerque, N.M. (11. 1 percent).

“Rising home values typically create wealth gains for existing homeowners as shown in NAR’s latest study, however, areas that are deemed ‘too expensive’ will have trouble attracting residents and companies looking to do business there,” Yun said. “We need a good balance that benefits both current and future homeowners, but right now, the balance is still in favor of home sellers.”

At the top of the list, where the most expensive metropolitan markets in the country rank, nine of the top 10 saw price increases, with only San Jose seeing a decline of 0.3 percent in its median price.

That said, the median price of a home in San Jose is still $1.246 million.

San Francisco saw a 3.9 percent increase to its median price ($990,000). It was followed by Anaheim-Santa Ana, Calif. ($828,000) which saw a 3.6 percent increase; Urban Honolulu saw its median price stay the same as 2018 ($812,600); San Diego ($655,000) which had a 4.6 percent increase; Boulder, Colo. ($630,400) which was a spike of 6.4 percent; Los Angeles-Long Beach (617,300) which jumped 7.2 percent from the previous year; Seattle-Tacoma ($528,800) which climbed 8.0 percent; Nassau County, N.Y. ($496,600) a 3.7 percent bump; and Boston-Cambridge ($482,800) which saw a 4.9 percent increase.

Although the home prices continue to skyrocket, some housing has been made more affordable because of the continually falling mortgage rates.

The 30-year fixed-rate mortgage averaged at 3.76 percent in the fourth quarter of 2019, a 4.95 percent drop from the fourth quarter of 2018.

This has spurred many first-time homebuyers to actively pursue that first home.

The median home price for a starter home in the fourth quarter fell to $233,800 while the median monthly mortgage payment dropped to $1,006 (assuming a 10 percent down payment).

Additionally, because of the drop in the mortgage rate, the income needed for a family to be able to afford a mortgage dropped from $52,896 in 2018 to $48,960 in 2019.

The median family income for the fourth quarter of 2019 was $79,740, which was an increase of nearly $2,700 from 2018. This means families are spending a lesser percentage of their income on their mortgage, dropping nearly two percent from 17.2 percent in 2018 to 15.3 percent in 2019.

However, in some of the most expensive markets, affordability is still just not realistic.

In San Jose, which still ranks as the most expensive metropolitan area in the country, a family would need an income of $223,900 to afford a 30-year fixed mortgage with a down payment of 20 percent.

Six-figure salaries are needed in all the top 10 markets to afford a mortgage on a median-priced home with just 5 percent down.