What it takes to buy a house in San Jose: more on that $216,000 annual income and the Bay Area affordability crisis

It almost takes a village to buy a house in Silicon Valley.

Tuesday’s story in the Mercury News spelled out the ugly details: A household income of $216,181 is needed to purchase a median-priced home in the San Jose metropolitan area, according to a new study.

That was the steepest income requirement in the nation — more than twice the $99,151 needed to buy in the New York City metropolitan area.

The San Francisco metro area placed second among the nation’s 50 most populous housing markets in this disturbing new set of rankings. It takes a $171,330 household income to buy in San Francisco, according to the study by the HSH.com mortgage information website. The analysis assumes a 20 percent down payment on a 30-year fixed loan.

During the third quarter in the San Jose metro — which includes Santa Clara and San Benito counties — the median price of a home was $1,165,000, according to HSH. With 20 percent down, that left the typical homeowner with a $5,044 monthly mortgage payment. In the San Francisco metro — which includes San Francisco, Marin, San Mateo, Contra Costa and Alameda counties — the median stood at $900,000 and the typical mortgage payment was $3,997.

These numbers have a familiar ring.

A Mercury News story written in August 2015 told the tale of Forest Glen Street, a shady lane of townhouses in Mountain View where longtime tenants were losing their homes because their rents were skyrocketing.  One horrified tenant, a biotech manager searching for a new place in a different neighborhood, said she had seen her share of three-bedroom apartments on Craigslist for $6,000. Because landlords required tenants to prove income of triple the rent, those units required an annual household salary of — you guessed it — $216,000.

While some observers warn that prices here are not sustainable — that we are in a “bubble condition” — the price trend continues upward for home sales.

Last week, we reported that the San Jose metropolitan area posted the nation’s steepest year-over-year plunge in the number of homes for sale in October — falling by a precipitous 51.6 percent. With buyers competing for so few listings, San Jose also posted the nation’s sharpest year-over-year rise in the median cost of a home: up 19.2 percent, according to Redfin.

In yet another story this month, we illustrated — you can see the chart here —  just how dire the affordability crisis has become in the Bay Area. In the first nine months of 2017, only 25.5 percent of single-family homes in the nine-county region sold for $500,000 or less, according to the CoreLogic real estate information service. In Santa Clara County, the share was a mere 9.0 percent. Even in “affordable” Contra Costa County, only 39 percent of single-family homes sold for $500,000 or under. As shocking as those percentages are, they are not quite as low as they were in 2007, before the housing bubble burst.

Photo: This four-bedroom house on Soelro Court in San Jose listed this month for $1.4 million. (Courtesy Redfin)

 

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