While home price gains continue to exceed historical norms at a national level, the latest asking price report from Trulia reveals marked differences in price gains between “red” and “blue” metros.
Asking prices rose 12.5 percent year-over-year in October blue metros and 11.1 percent in red metros, according to the Trulia Price Monitor which observed the 100 largest metro areas and the nation, breaking them into categories based on the 2012 presidential election.
“Home prices are skyrocketing in many of America’s bluest metros, like Oakland and Detroit,” said Jed Kolko, chief economist for Trulia, also noting that, “The home-price rebound has bypassed most of America’s reddest metros.”
“But Red America shouldn’t turn green with envy at Blue America’s recovery: housing remains much more affordable in red metros than blue metros, and unemployment is lower, too,” Kolko said.
In general, blue metros suffered more from the housing crisis than red metros, according to Trulia.
“The uneven housing and economic recoveries in America across red and blue metros could aggravate political partisanship,” according to Trulia.
In particular, representatives from blue metros will face pressure to reduce unemployment and make homeownership more attainable, according to Trulia.
Annual price changes in the top five reddest metros range from 2.2 percent in Knoxville, Tennessee, to 12 percent in Fort Worth, Texas. Fort Worth was the only one of the reddest metros to post a double-digit price gain over the year in October.
On the other hand, four of the top five bluest metros posted double-digit price gains over the year in October with the highest gain in Detroit at 24.5 percent, and the lowest in New York at 7.3 percent.
As mortgage rates increase, housing inventory increases, and investor activity subsides, prices gains will continue to slow, according to Trulia.
October’s 0.6 percent monthly price gain is the second-lowest price increase in seven months, according to the Trulia Price Monitor.
The annual price increase in October was 11.7 percent.
On the other hand, rents are rising at a slower pace with a 2.7 percent annual gain in October, according to the Trulia Rent Monitor.
San Francisco posted the highest year-over-year rent increase at 10.1 percent, and its median rent price for a 2-bedroom unit now tops the charts, even exceeding New York.
The median rent price for a 2-bedroom unit in San Francisco is $3,250.