Home Costs Are Rising the Most in These 5 Cities

Housing prices are up and only going higher, according to the S&P CoreLogic Case Shiller US National Home Price NSA Index. The company’s 20-City Composite showed a 6.4% gain year-over-year, with 12 of the 20 cities reporting larger price increases in 2017 than in 2016.

If any of that makes sense to you, you know it’s a big deal for home buyers.

It’s a big deal for home sellers, too. After all, those who bought prior to or right around the time of the real estate market crash in 2007 were still underwater until very recently. Now, they have a chance of selling the homes they bought at the very peak of the market surge, but you (the homeowner) are going to be the one who has to absorb the blow.

Luckily, it’s a big country, and some places are much more affordable than others. We’re not here to talk about those places, though. We’re going to tell you where you totally can’t afford to buy a house -- or if you do, it’s going to cost you a premium. Since the real estate market has been plagued by housing inventory shortages, many areas are experiencing run-away housing costs simply due to too many buyers and too few homes.

Cities Where You Can’t Buy Avocado Toast and a House

Although the joke is old and worn out by now, it’s still kind of hilarious… stop us if you’ve heard this one. In 2017, Australian real estate tycoon Tim Gurner told the Australian edition of 60 Minutes that he wasn’t “buying smashed avocado for $19…” when he was saving for his first home. This, as it turns out, is the basis of the BBC’s appropriately named “Avocado Toast Index,” which shows just how many servings of avocado toast (at the local price) it would take to come up with a 20% down payment on a home there.

Of course, the whole avocado argument totally misses the point of housing affordability in cities across the country. As mentioned above, much of the inflation seen in the current market is due to a small inventory, lots of potential buyers, and shifting employment trends that are making certain areas incredibly appealing to a generation without a lot of prospects back home.

Without any further ado, the top cities where you’ll have to choose between avocado toast or a mortgage loan:

1. Columbus, Ohio

Median Home List Price: $241,300

1-year percent change: 27.1%

3-year percent change: 51.3%

5-year percent change: 66.4%

Even though Cleveland rocks, Columbus is the place to be if you’ve got a time machine and some cash in a briefcase. As the state capital of Ohio, Columbus has also been a traditionally inexpensive place to buy a house -- but not anymore, according to recent figures released by Realtor.com. With a 27.1% year-over-year increase in housing prices, this is one hot market -- except during the winter when you’ll be snowed in for days at a time.

2. Fort Wayne, Indiana

Median Home List Price: $176,100

1-year percent change: 22.5%

3-year percent change: 52.5%

5-year percent change: 67.9%

Fort Wayne is a city with a long history, going all the way back to 1794, when it was an actual fort. There’s not a lot to say about Fort Wayne, except that even for an area of explosive housing inflation, the median home is still pretty doable for many people. Hey, if you’re a telecommuter, Fort Wayne, Indiana may have plenty of homes you can afford. Definitely a five-toast rating.

3. Santa Maria, California

Median Home List Price: $1,363,000

1-year percent change: 20.9%

3-year percentage change: 59.6%

5-year percentage change: 95%

Located between San Jose and Los Angeles, the agricultural town of Santa Maria is positioned right on the Pacific Ocean, with great views and nothing else for miles and miles. It is a bit surprising that such a sleepy place with only about 100,000 residents would fetch such huge prices, but in the last few years it’s seen a boom in industries moving into the area. Along with the growing agriculture sector, aerospace, communications, high tech research and development, energy production and military operations have stimulated the local economy and brought in lots of new blood. If you’re headed there for work, may the odds ever be in your favor.

4. Omaha, Nebraska.

Median Home List Price: $259,400

1-year percent change: 20.7%

3-year percent change: 62.1%

5-year percent change: 73.5%

If you’ve ever been to Nebraska, or seen it on Google Maps, you know just how little there is in the state. It’s miles and miles of crops, only occasionally broken up by a highway or a tractor. Except, as it turns out, around Omaha. Apparently, Omaha is among the most happenin’ places in the entire country right now. You’re going to be hard-pressed to find any avocado trees here, so you may be able to buy a home if you’re fast.

5. Lexington, Kentucky

Median Home List Price: $269,900

1-year percentage change: 14.9%

3-year percentage change: 53.1%

5-year percentage change: 61.7%

Lexington’s had a lot of hot years, so the fact that it only saw almost-15% inflation in housing last year may mean that it’s actually slowing down a bit. That’s a good thing if you’re a buyer, but not so hot if you’re a seller. The University of Kentucky is a major research hub that brings in students who apparently just don’t leave. If you choose to buy a house here, make sure to keep a broom inside your front door so you can chase those hapless academics off your porch on warm mornings.

Want Your Toast and a Mortgage, Too?

Sorry, we were pretty sure there weren’t enough avocado toast jokes in there, so we had to fit one more in. Anyway, if you are serious about buying a house in one of these hot markets, or even somewhere a little less volatile, we can help you find the right mortgage for your situation. Many mortgages only require a 5% down payment, making it easier to secure a house even in the toughest markets. Contact us here at Home.Loans and we’ll walk you through your many options.