Home affordability falls to 18% in Bay Area, report finds

San Mateo County has highest average home price at nearly $2.3M

Residential real estate, Bay Area, affordability, interest rates, inflation, housing shortage, out-migration

For most Bay Area and California residents, home ownership has been out of reach. Now the ability to afford a typical home has grown even worse, according to a new study.

Housing affordability fell in all nine Bay Area counties last quarter ending in June, the San Francisco Chronicle reported, citing a report from the California Association of Realtors. Across the state, it dropped to the lowest level in 15 years.

“Housing affordability continued to slide in California in the second quarter primarily because of rising interest rates and home prices remaining elevated,” said Oscar Wei, deputy chief economist for the association, in an email to the Chronicle.

The study looked at the percentage of households that can afford to buy a median-price, single family home. The low housing affordability could result in less home ownership rates and more out-of-state migration if the housing supply shortage continues, Wei said.

In the Bay Area, 18 percent of home buyers could afford a home that costs a median $1.495 million, from April to June. To move in, they would need a minimum income of $337,200 for a monthly payment of $8,430, which includes taxes and insurance on a 30-year, fixed-rate loan with a 20 percent down payment.

Alameda, Napa and San Mateo counties tied for the lowest housing affordability rate, with 15 percent of households able to purchase a median-priced single-family home.
In San Mateo County, a would-be buyer would need to earn at least $512,000 to afford the cost of a median $2.27 million home, the highest in the Bay Area.

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In San Francisco County, 17 percent were able to afford the typical $2 million home last quarter, with 18 percent in Santa Clara County able to qualify for a typical $1.9 million home.

Solano County is the most affordable, requiring an income of $140,800 for a typical $625,000 home. But the 28 percent affordability rate for the second quarter of 2022 was down from 37 percent in the prior quarter and from 40 percent in the second quarter of 2021.

Affordability fell across most counties in California. Statewide, 16 percent of home buyers could afford a typical home last quarter. That’s down from 24 percent in the prior quarter and 23 percent in the second quarter of last year. Buyers would need to earn a minimum $199,200 a year to qualify for an $883,370 median-priced, single-family home, with a monthly nut of $4,980.

Across the nation, 38 percent of home buyers could afford a $413,500 median-priced home last quarter, down from 47 percent in the first quarter and from 49 percent in the second quarter a year ago. The minimum qualifying income was $93,200, with a monthly payment of $2,330.

Dana Bartholomew

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