The wealthy buy; the not-so-wealthy rent. That’s always been the conventional wisdom when it comes to housing.
But San Francisco is not necessarily known for its conventional approach to anything, and the rental site RENT Cafe noticed that we’re seeing a sharp uptick recently in a very particular demographic.
The number of renters in San Francisco earning $150,000/year or more went up 35 percent between 2014-2015, according to the census. That gives us about 57,000 wealthy rental households, or about 25 percent of the renting population overall.
The site does not speculate about what accounts for the trend. But the fact that the number of renters making less than $150K also went down during the same period pretty much spells out what’s happening.
After all, even before taxes, a household making $150,000 annually can only afford to be putting $3,500/month toward a home if they want to stick with the prescribed spend-30-percent-of-your-income-on-housing formula.
Only two neighborhoods in San Francisco can afford you a mortgage like that on a median priced home right now: the Tenderloin and Bayview. That’s it.
Of course, almost everyone here breaks the vaunted 30 percent margin anyway (to the point that it’s almost a quaint standard now). And it’s increasingly hard to rent a home at $3,500/month too.
But the point remains: $150,000 just isn’t as much money around here as it is most other places.
RENT Cafe offers a few other insights that are probably true as well: The ups and downs of the home market over the last 15 or so years has left some shy about the idea of a home as an investment, and some are just attracted to luxury rentals.
But the bottom line is probably still the bottom line.
- 1.2 million More Wealthy Renters [RENT Cafe]
- American Community Survey [US Census]
- Where Can the Average SF Earner Buy a Home? [Curbed SF]