It may not be surprising that someone making a median salary in San Francisco can afford only 3% of homes currently for sale, or even that only 7% of homes are affordable for a family bringing in two median salaries. But new research from Redfin, who recently brought us the news that teachers can't afford a single house for sale in San Francisco, shows that only 8% of houses available are affordable on the average engineer's salary and only 23% of San Francisco property is affordable for the average doctor. This stands in contrast to other big cities across the country. Redfin looked at forty major U.S. cities and found that across those cities 86% of homes would be affordable on a doctor's salary and 41% would be affordable on two median salaries. Redfin considers an affordable home to be one for which the monthly payment would be 28% our less of gross monthly income.
Residents of the San Francisco area have historically spent a higher portion of their income on housing than people in other cities. A new Zillow report notes that homeowners in the San Francisco metro area spent 38% of median income on a mortgage payment between 1985 and 2000 compared to 22% spent nationally during that period. For homes bought during Q4 of last year, a household making the median income would have to spend 39%. However, if mortgage rates hit 5% and home values appreciate as much as Zillow anticipates, that figure could rise to 46% of income within a year.
Zillow provides a handy map of areas where more than half of homes are affordable for median income households. For households making the median income and willing to spend the historic average of 37.7% of that income on a mortgage, equating to a monthly payment of around $2,530, clusters of affordability are located south of the city and in Oakland, as well as further out into the East Bay.
· Two Middle Class Incomes Don't Add Up to a Home [Redfin Blog]
· San Francisco is Now Completely Unaffordable for Teachers [Curbed SF]
· 2013 Q4 Affordability [Zillow]