Housing prices have seen a double-digit uptick in more than half of major U.S. metros. New construction, however, isn’t keeping up.
Good news if you’re already a homeowner: Housing prices “accelerated” in the first quarter of 2015, according to the National Association of Realtors. There are, in fact, 51 metropolitan areas where home prices rose by double digits—almost double the number of metros that saw that kind of increase in 2014.
One problem: This jump has only been made possible, of course, because of the paucity of housing available in most markets.
Lawrence Yun, chief economist for the NAR, said in a statement:
Homeowners throughout the country have enjoyed accumulating household wealth through the steady rise in home values in the past few years. However, some homeowners are hesitant to move-up and sell because they aren't confident they'll find another home to buy. This trend—in addition to subpar homebuilding activity—is leading to the ongoing inventory shortages and subsequent run-up in prices seen in many markets.
The five most expensive cities for housing won’t be a surprise to anyone: All of them in California—except one in Hawaii. So if you’re in the market to buy housing at a reasonable rate in California (if you can even find housing), you should basically avoid cities that have “San” in them. The single-family housing price medians in the top five metros are:
- San Jose: $900,000
- San Francisco: $748,300
- Honolulu: $699,300
- Anaheim-Santa Ana: $685,700
- San Diego: $510,300.
These areas also register some of the weakest growth for housing affordability in the nation, according to the NAR’s own data.
Also bear in mind that California is among the top three states for homelessness rates. Hawaii tops that list with 465 homeless people per 100,000 on a given night; California, 367 per 100,000 (both in 2013). In 2012, Richard Florida and Charlotta Mellander analyzed homelessness data in major metros and found a positive correlation between homeless rates and housing costs. San Diego, San Francisco, and San Jose all registered among the top 20 metros for homeless populations and ranks (using 2009-2011 data).
Current homeowners banking on wealth from rising prices might reasonably refuse additional housing being built in tonier neighborhoods. But that kind of NIMBY-ism reduces needed density—and makes housing unaffordable for everyone else, especially those of very low income. Yet wealthy homeowners can’t take advantage of the increased value of their homes if there are fewer other homes for them to move to.
That’s it’s own kind of trap, but one that wealthier homeowners can live with. There are worst places to be trapped, like on the streets.