Buying a San Francisco home takes an income of at least $350K a year

New report shows fewer than 20 percent can afford a median-priced home in the city

Homes are “affordable” for less than 20 percent of SF residents (iStock)
Homes are “affordable” for less than 20 percent of SF residents (iStock)

If you want to buy a median-priced single-family home in San Francisco, San Mateo, Santa Clara or Marin counties, you’ll need an annual income of more than $300,000, according to a new report from Compass.

San Francisco residents will need to make $350,000. In San Mateo County, where median prices surged past $400,000 during the pandemic, the minimum income is nearly $400,000 a year.

Even with mortgage rates still at historic lows, monthly costs rose throughout the Bay over the past year.

A median-priced home in San Mateo County now requires nearly $10,000 in monthly payments, assuming a 20% down payment, the prevailing 30-year fixed mortgage interest rate, plus estimated tax and insurance costs. That’s up from just over $8,000 a month one year earlier and the upward trend is seen throughout the Bay Area and the state.

In California overall, monthly housing expenditures for a median-priced home were under $4,000 in the second quarter of 2021, up nearly $1,000 a month from the second quarter of 2020, according to the report.

Even though prices were up, affordability issues remained largely unchanged in the most expensive areas, as lower-income residents and students departed during the pandemic and were replaced by those who make more money. In San Francisco, for example, 19 percent of households could afford a median-priced home in the second quarter of 2021, the same as one year earlier, even though a median-priced home in the city is now $700 more per month than it was a year ago.

The students may be back this fall, but lower-income households could be gone for good, according to Compass Chief Market Analyst Patrick Carlisle, who authored the report.

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“The wildcards are all the low-income people who left and won’t come back because of housing and living costs, and what occurs when the eviction moratorium expires, which presumably will have to occur sometime,” he said. “Will this fuel a further exodus out of the city of lower-income residents? I hope not, but fear so.”

A similar trend occurred in Santa Clara, where monthly housing costs jumped from $6,500 to over $7,800 a month, year over year, yet affordability only dropped from 22 percent in 2020 to 21 percent in 2021. Compare that with Monterey and Santa Cruz counties, which saw affordability rates drop from around 25 percent to 18 percent year-over-year.

“Monterey has a very large ultra-luxury market in the Carmel-Pebble Beach area and prices went through the roof there,’’ Carlisle said. However, both counties have large populations of agricultural workers, who are at the low end of the wage scale, but who did not leave because their jobs didn’t disappear. So, they didn’t see the large exodus of lower-wage workers, who are probably mostly tenants, and with the price increases came a hammer to the affordability calculations there.”

Carlisle’s study didn’t take condo prices into account. Those took a price hit at the start of the pandemic, though they’ve recovered some this year, and also made up the majority of San Francisco’s sales in 2020.

The city is still made up mainly of renters, who have seen prices come down about 20 percent since the pandemic began.

“So, in the past year, houses went up in price significantly, condo prices have generally been flat, and rents dropped dramatically — an unusual mix where housing of different types have reacted totally differently to the pandemic,” he said.

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