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12 cities where clients should fear a housing bubble the most

An improving economy and spiking mortgage rates could be hindering your clients’ ability to afford a house.

During the third quarter of 2018, U.S. home prices hit their lowest level of affordability since 2008, according to Attom Data Solutions' Home Affordability Report. More than three-quarters of the 440 counties analyzed in the survey posted an affordability index below their historical averages.

"Rising mortgage rates have pushed home prices to the least affordable level we've seen in 10 years, both nationally and at the local level,” Daren Blomquist, senior vice president at Attom Data Solutions said in a statement. “Close to one-third of the U.S. population now lives in counties where buying a median-priced home requires at least $100,000 in annual income.”

To determine affordability, the amount of income needed to make monthly house payments was calculated, assuming a 3% down payment and a 28% maximum front-end debt-to-income ratio.

Here's a look at the 12 cities with the biggest gap between the current wages needed to buy a home and the historical average. The Attom data is based on counties with at least 500 home sales and where the annual income needed to buy is greater than the local average salary.

Multiple counties in the Denver-Aurora-Lakewood, Colorado, and San Francisco-Oakland-Hayward, California, metropolitan statistical areas made the list and are combined in the rankings.

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12. Boulder, Colorado
Boulder County
Median sales price: $508,750 (+6% YoY)
Local average income: $65,234 (+3% YoY)
Actual income needed to afford a home: $139,076
Share of local average income needed to buy a home (3Q18): 59.7%
Share of local average income needed to buy a home (historic): 48.1%
Difference: 11.6 percentage points
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11. Boise City, Idaho
Canyon County
Median sales price: $212,500 (+17% YoY)
Local average income: $36,153 (+2% YoY)
Actual income needed to afford a home: $61,378
Share of local average income needed to buy a home (3Q18): 47.5%
Share of local average income needed to buy a home (historic): 35.8%
Difference: 11.7 percentage points
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10. Santa Rosa, California
Sonoma County
Median sales price: $610,000 (+6% YoY)
Local average income: $52,858 (+4% YoY)
Actual income needed to afford a home: $170,683
Share of local average income needed to buy a home (3Q18): 90.4%
Share of local average income needed to buy a home (historic): 78.6%
Difference: 11.8 percentage points
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9. Houston-The Woodlands-Sugar Land, Texas
Fort Bend County
Median sales price: $286,950 (+9% YoY)
Local average income: $51,246 (+2% YoY)
Actual income needed to afford a home: $98,602
Share of local average income needed to buy a home (3Q18): 53.9%
Share of local average income needed to buy a home (historic): 41.7%
Difference: 12.2 percentage points
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8. Fort Collins, Colorado
Larimer County
Median sales price: $370,000 (+8% YoY)
Local average income: $50,739 (+3% YoY)
Actual income needed to afford a home: $100,422
Share of local average income needed to buy a home (3Q18): 55.4%
Share of local average income needed to buy a home (historic): 43.2%
Difference: 12.2 percentage points
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7. Urban Honolulu, Hawaii
Honolulu County
Median sales price: $598,613 (+6% YoY)
Local average income: $52,130 (+2% YoY)
Actual income needed to afford a home: $158,948
Share of local average income needed to buy a home (3Q18): 85.4%
Share of local average income needed to buy a home (historic): 72.3%
Difference: 13 percentage points
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6. Greeley, Colorado
Weld County
Median sales price: $330,000 (+7% YoY)
Local average income: $49,699 (+5% YoY)
Actual income needed to afford a home: $89,080
Share of local average income needed to buy a home (3Q18): 50.2%
Share of local average income needed to buy a home (historic): 37.1%
Difference: 13.1 percentage points
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5. Dallas-Fort Worth-Arlington, Texas
Denton County
Median sales price: $312,188 (+12% YoY)
Local average income: $50,102 (+1% YoY)
Actual income needed to afford a home: $100,255
Share of local average income needed to buy a home (3Q18): 56%
Share of local average income needed to buy a home (historic): 42.6%
Difference: 13.5 percentage points
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4. San Jose-Sunnyvale-Santa Clara, California
Santa Clara County
Median sales price: $1,190,000 (+2% YoY)
Local average income: $129,207 (+7% YoY)
Actual income needed to afford a home: $327,284
Share of local average income needed to buy a home (3Q18): 70.9%
Share of local average income needed to buy a home (historic): 57.4%
Difference: 13.5 percentage points
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3. New York-Newark-Jersey City, New York, New Jersey, Pennsylvania
Queens County
(New York county was not included in the ATTOM report due to insufficient data)
Median sales price: $630,000 (+9% YoY)
Local average income: $52,611 (+3% YoY)
Actual income needed to afford a home: $177,541
Share of local average income needed to buy a home (3Q18): 94.5%
Share of local average income needed to buy a home (historic): 80.6%
Difference: 13.9 percentage points
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2. Denver-Aurora-Lakewood, Colorado
Arapahoe County
Median sales price: $354,700 (+7% YoY)
Local average income: $64,974 (+3% YoY)
Actual income needed to afford a ho: $97,560
Share of local average income needed to buy a home (3Q18): 42%
Share of local average income needed to buy a home (historic): 30.5%
Difference: 11.5 percentage points

Jefferson County
Median sales price: $415,000 (+9% YoY)
Local average income: $56,823 (+3% YoY)
Actual income needed to afford a home: $113,158
Share of local average income needed to buy a home (3Q18): 55.8%
Share of local average income needed to buy a home (historic): 41.6%
Difference: 14.1 percentage points

Adams County
Median sales price: $340,000 (+10% YoY)
Local average income: $53,443 (+2% YoY)
Actual income needed to afford a home: $93,047
Share of local average income needed to buy a home (3Q18): 48.7%
Share of local average income needed to buy a home (historic): 34.4%
Difference: 14.3 percentage points

Denver County
Median sales price: $430,000 (+9% YoY)
Local average income: $68,419 (+3% YoY)
Actual income needed to afford a home: $117,148
Share of local average income needed to buy a home (3Q18): 47.9%
Share of local average income needed to buy a home (historic): 33.4%
Difference: 14.6 percentage points
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1. San Francisco-Oakland-Hayward, California
Contra Costa County
Median sales price: $615,000 (+10% YoY)
Local average income: $67,860 (+3% YoY)
Actual income needed to afford a home: $174,423
Share of local average income needed to buy a home (3Q18): 72%
Share of local average income needed to buy a home (historic): 58.5%
Difference: 13.4 percentage points

San Mateo County
Median sales price: $1,375,000 (+12% YoY)
Local average income: $119,119 (+8% YoY)
Actual income needed to afford a home: $377,210
Share of local average income needed to buy a home (3Q18): 88.7%
Share of local average income needed to buy a home (historic): 74.7%
Difference: 14 percentage points

Alameda County
Median sales price: $850,000 (+13% YoY)
Local average income: $74,607 (+4% YoY)
Actual income needed to afford a home: $237,760
Share of local average income needed to buy a home (3Q18): 89.2%
Share of local average income needed to buy a home (historic): 67.5%
Difference: 21.7 percentage points