Home Prices Rise 6.3% in October, Most in 6 Years

Before you go, we thought you'd like these...
Before you go close icon
For sale sign - home pricesBy Christopher S. Rugaber

WASHINGTON -- A measure of U.S. home prices rose 6.3 percent in October compared with a year ago, the largest yearly gain since July 2006. The jump adds to signs of a comeback in the once-battered housing market.

Core Logic also said Tuesday that prices declined 0.2 percent in October from September, the second drop after six straight monthly increases. The monthly figures are not seasonally adjusted. The real estate data provider says the decline reflects the end of the summer home-buying season.

Steady price increases are helping fuel a housing recovery. They encourage more homeowners to sell their homes. And they entice would-be buyers to purchase homes before prices rise further.

Home values are rising in more states and cities, according to the report. Prices increased in 45 states in October, up from 43 the previous month. The biggest increases were in Arizona, where prices rose 21.3 percent, and in Hawaii, where they were up 13.2 percent.

The five states where prices declined were: Illinois, Delaware, Rhode Island, New Jersey, and Alabama.

In 100 large metro areas, only 17 reported price declines. That's an improvement September, when 21 reported declines.

11 PHOTOS
10 Least Affordable Cities to Buy a Home
See Gallery
Home Prices Rise 6.3% in October, Most in 6 Years

Median home price: $455,000
Median income: $68,300
Percentage of homes that are affordable: 28.5%

New York is a hell of a town, but not for homebuyers. Family income levels are barely higher than the national median of $65,000, but home prices are nearly 2 1/2 times as much, according to the National Association of Home Builder/Wells Fargo Housing Opportunity Index.

That puts nearly two-thirds of the New York metro-area's housing inventory out of reach for the average homebuyer. In Manhattan, home prices are even more stratospheric, averaging a brutal $1,100 a square foot, according to appraiser Miller Samuel. That means this $1.3 million listing for a 1,200-square-foot, two-bedroom apartment on the Upper West Side is pretty much the norm.

And, despite substantial unemployment, 8.5% in October, people continue to move to Gotham and its surrounding boroughs. The metro area gained nearly 100,000 newcomers last year -- nearly the entire population of a small city. All of those new residents make it that much harder to find an affordable place.

Photo: Wikimedia Commons/Dschwen

Median home price: $659,000
Median income: $103,000
Percentage of homes that are affordable: 31.4%

It's not just in San Francisco where home buying is expensive, many of the surrounding cities and towns -- like Sausalito, Berkeley and Daly City -- are extremely pricey as well.

Buying a home here would be made even harder if it weren't for the size of residents' paychecks. San Francisco is one of only a handful of metro areas where the median household income exceeds six figures thanks, in part, to its thriving tech sector. The area continues to spawn innovative social media and app companies, with Twitter, Instagram and Yelp among the recent successes to call the city home.

Yet while the sky-high paychecks make it easier for some people to afford the multimillion dollar asking prices in San Francisco, it's a much harder proposition for others who are pulling in a more modest wage.

Photo: Wikimedia Commons: Paul.h

Median home price: $440,000
Median income: $85,300
Percentage of homes that are affordable: 43.5%

The Santa Ana metro area, which encompasses much of Orange County, is home to Disneyland, over a dozen beach communities and some of the most expensive housing in the United States.

Homes in the attractive suburbs here tend to be large and luxurious and can set even high-income earners back financially. Even with a median income of $85,300, lofty home prices make it tough to pay area mortgages.

Photo: Wikimedia Commons: Cbl62

Median home price: $335,000
Median income: $64,800
Percentage of homes that are affordable: 44.1%

Los Angeles may have its Hollywood stars, Rodeo Drive boutiques and Brentwood mansions, but it's also home to millions of blue-collar workers employed in the area's aerospace, energy, shipping and warehousing industries.

While homes are a lot more affordable now than they were during the housing boom -- back then the median price was $530,000 and only 3% of the homes sold were considered affordable to median income families -- it's still a challenge for many of the area's residents to cover the cost of a mortgage.
Things are looking up, however. The unemployment rate has fallen by two percentage points over the past 12 months and home prices are starting to stabilize even further.

Photo: Wikimedia Commons: Nserrano

Median home price: $402,000
Median income: $87,100
Percentage of homes that are affordable: 44.2%

Drivers on Interstate 95 traveling through Bridgeport might be shocked to learn that the city is one of the least affordable housing markets in the nation. Old factories and warehouses sit idle and many neighborhoods have seen better days.

Indeed, home prices are inexpensive within city limits -- you can pay less than $140,000 for a three bedroom, two-bath Cape Cod, for example. But Bridgeport lies within a metro area that also includes Greenwich, Westport and other wealthy enclaves.

Those locales are filled with posh homes occupied by corporate brass, hedge fund managers and professional athletes, all of which have helped to raise the area's home prices beyond the reach of many families.

Photo: Wikimedia Commons: Iracaz

Median home price: $530,000
Median income: $105,000
Percentage of homes that are affordable: 46.2%

As it has done in San Francisco, the tech industry has brought explosive growth -- and big paychecks -- to the San Jose metro area.

The population has boomed here as Silicon Valley firms continue to hire tech talent. All those well-paid techies have money to spend on everything, including housing, which has boosted prices for everyone.

Another factor adding to the sky-high prices: The area is hemmed in by the Pacific Ocean and San Francisco Bay, limiting where developers can build. That drives up land prices, helping to make the housing market one of the nation's most expensive.

Photo: Wikimedia Commons: XAtsukex

Median home price: $425,000
Median income: $82,700
Percentage of homes that are affordable: 48.8

The rugged landscape that makes Honolulu beautiful also makes it expensive. Located on a narrow strip of land between the sea and the mountains, lots are scarce and incredibly pricey.

Home prices reflect that fact -- as well as the cost of materials, most of which have to be shipped in from the mainland.

Salaries, while higher than average, don't quite match the high cost of housing on Hawaii. Many jobs are in service industries like hospitality, and job-seeking locals often have to compete with mainlanders seeking to build a life in paradise.

Photo: Wikipedia

Median home price: $339,000
Median income: $75,900
Percentage of homes that are affordable: 54.6%

San Diego residents pay a premium for the area's fabulous weather, beautiful beaches and healthy, outdoor lifestyle.

Home prices soared during the housing bubble, rising 127% from 2000 to a peak of $500,000 in late 2005. At that point, according to the National Association of Home Builder/Wells Fargo Housing Opportunity Index, only 3.6% of homes sold were affordable for the typical household.

Prices have fallen significantly from that peak, with more than half of all homes now affordable to the average family. But that's still not good enough to knock San Diego off the least affordable list.

Photo: Wikimedia Commons: Tim Shell

Median home price: $349,000
Median income: $91,900
Percentage of homes that are affordable: 55.3%

Newark doesn't conjure up images of luxury high-rises or leafy upper-middle-class suburbs, but the communities surrounding it do.

In fact, in the inner city, a typical house costs less than $160,000, according to Trulia. But in nearby Manhattan-satellite cities, like Jersey City and Hoboken, prices are much higher. So, too, are prices in the lush New Jersey suburbs of Madison, Morristown and Short Hills. All of that serves to lift the area's overall median home prices.

Despite all of these pricey homes, a high median income in the area has helped to raise the area's affordability score and more than half of homes sold last quarter could be purchased by the typical local family.

Photo: Wikimedia Commons: Andreas Praefcke

Median home price: $141,000
Median income: $41,700
Percentage of homes that are affordable: 61.7%

Typically, the least affordable U.S. housing markets are that way because home prices are so high. Not El Paso. Here, incomes are so low that it's difficult for a large number of residents to afford even the most modestly-priced homes.

Many of the area's jobs depend on government largesse with Fort Bliss, the city, and school districts serving as major employers. Agricultural support services, trade with Mexico, and the tourist industry also provide many of the employment opportunities. But pay in these jobs is often at minimum wage or only slightly higher.

Photo: Wikimedia Commons: Dicklyon

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

Mortgage rates are near record lows, while rents in many cities are rising. That makes home buying more affordable, pushing up demand.

And more people are looking to buy or rent a home after living with relatives or friends during and immediately after the Great Recession.

At the same time, the number of available homes is at the lowest level in 10 years, according to the National Association of Realtors. The combination of low inventory and rising demand pushes up prices.

Last week, an index measuring the number of Americans who signed contracts to buy homes in October jumped to the highest level in almost six years. That suggests sales of previously occupied homes will rise in the coming months.

Builders, meanwhile, are more optimistic that the recovery will endure. A measure of their confidence rose to the highest level in six and a half years last month. And builders broke ground on new homes and apartments at the fastest pace in more than four years in October.

See also:
The New Housing Boom Could Be Coming

More on AOL Real Estate:
Find out how to
calculate mortgage payments.
Find
homes for sale in your area.
Find
foreclosures in your area.
Find homes for rent in your area.




Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.
Read Full Story

Find a New Home

Buy
Rent
Value
Powered by Zillow

From Our Partners