**The answer is ** frustrated.
The word out of touch means that someone is unaware of or insensitive to the current situation. In this case, the speaker is saying that the person is unaware of how expensive houses have become. The phrase an arm and a leg is an idiom that means something is very expensive. The speaker is emphasizing the high cost of houses.
Here is an example of how the sentence could be used:
"She is really frustrated with the prices of houses these days. She says it's like they're asking for an arm and a leg."