$216,181: That’s the household income needed to buy a house in San Jose, report says

A new analysis shows the housing affordability crisis is escalating nationally. But the runaway markets are the San Jose and San Francisco metropolitan areas, where the household income required to buy a house is off the charts.

According to the report from the HSH.com mortgage information website, a $216,181 household salary is required to buy a median-priced house in the San Jose metro area, while $171,330 is needed to buy a typical home in the San Francisco metro. That’s assuming a 20 percent down payment on a 30-year fixed loan.

Drawing on third-quarter data, HSH looked at the nation’s 50 most populous metropolitan areas. In the San Jose metro, the median price was $1,165,000, requiring a $5,044 monthly mortgage payment. In the San Francisco metro — which includes Contra Costa County, as well as Oakland and all of Alameda County —  the median stood at $900,000 and the typical mortgage payment was $3,997.

A wide gap separates the two Bay Area metros from other expensive markets. The income needed to buy a median-priced house in Los Angeles is $115,068, according to HSH, while the necessary income is $99,151 in the New York City area, $97,465 in the Boston area, $93,418 in the Seattle area and $84,503 in the Washington, D.C. area.

The report blames the affordability crisis on a limited supply of homes, which forces prices up and retards sales growth. “There are few signs that the situation will get better quickly or soon,” the report says.

It expands the point by quoting Lawrence Yun, chief economist for the National Association of Realtors: “Affordability pressures are frustratingly occurring in places where jobs are plentiful and incomes are rising,” he said. “Without a significant boost in new and existing inventory to alleviate price growth, job creation could slow in high-cost areas in upcoming years if residents begin exiling to more affordable parts of the country.”

Yun said as much last month when he addressed the annual convention of the Santa Clara County Association of Realtors: “The smartest people in America are all here in San Jose,” he said, but warned that that may not always be the case. More and more, he predicted, tech companies “will flee” the area and go to more affordable regions of the country.

According to HSH, some of those areas include Atlanta, where a $55,390 household income will buy a median-priced home, or Austin, a growing tech center where $67,440 will get a house. Closer to the Bay Area, $50,728 will get a house in Las Vegas and $71,344 will still get a house in Sacramento, a long commuter-ride away from the core of Silicon Valley.

Top: Map of 25 most expensive metropolitan areas. (Courtesy HSH.com)

 

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  • elkhornsun

    The problem of affordable housing is the net result of allowing private developers to dictate housing planning and construction in the state. Developers make more profit from ranch style two story single family houses with zero lot lines. The people would be better served by the availability of high density townhouses and multi-story buildings that result in lower costs for housing and lower maintenance cost, as well as lower costs for the cities to provide water and sewage services, lower costs for running utilities, more chance of high speed internet service, and shorter distances for children to WALK to school or to parks, and higher densities make mass transit feasible instead of having households required to have two or more cars to be able to get to work, school, stores, and recreation areas.

    For decades city planning has been done in reality by developers who have neither the intellect nor the integrity to do what is right instead of what is most profitable. Housing and transportation development has been managed by the vulture capitalists and the SF bay area is a poster child for the resulting costs to the general population, both economically and in terms of the quality of life and a healthy environment for adults and for children.

    • Bob

      Elkhorn,

      San Francisco and San Jose are the predominant cities in the Bay Area that builds the largest number of homes in the Bay Area–something to the effect of nearly 50-55% of homes built in the Bay Area. And both cities build predominantly (in the 90%) with high-density multi-family homes. San Francisco has been building that form for many decades, and San Jose has been building that form predominantly for the past 2 decades. Though both cities still have a large stock of SFH with yards, very little of that type has been built the last 2 decades (in case of San Jose) and 4-5 decades (in case of San Francisco).

      The problem is simpler than what you describe. The problem is simply NOT enough homes are being built, of any type. And that is up to the local government, NOT the developers. They would happily build millions of units of housing, but it is the local governments who restrain the supply.

 
 
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