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The housing inventory crunch is driving up home prices in several markets where supply continues to lag demand, but borrowers can afford properties in some of these areas when local market conditions are taken into account.

Here's a look at 12 cities where home prices are higher, but local market conditions make them surprisingly affordable.

Home prices adjusted for regional affordability are lower than they were in 2000 for all except four of these 12 markets. Because borrowers in these areas find it easier to qualify for loans to buy homes with moderately higher prices, they are attractive markets for mortgage lenders.

But home prices have risen by between 1% and 11% year-over-year in these areas and mortgage interest rates rose recently as well, so they may not remain affordable for long. Borrowers may find there are fewer homes to choose from at less affordable prices if they wait to buy.

All of the houses in these markets are priced above $248,000, which is the median price paid for a resale home, according to National Association of Realtors data for December 2017. The full range of prices starts as low as $254,000, and in one case exceed more than $1 million.

The data, from the First American Real House Price Index, measures home price changes, taking local wages and mortgage rates into account "to better reflect consumers' purchasing power and capture the true cost of housing." The November 2017 data is ranked by RHPI value, where a reading of 100 is equal to conditions in January 2000.


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