Mortgage and consumer information site HSH issued another of its quarterly reports last week, estimating how much annual income one should make before buying a home in major U.S. cities.
And the recommended income in San Francisco will surprise few, continuing its ever-upward trajectory. But the big sticker shock in this case happens when we compare the current figure to what HSH claimed in May of this year.
Assuming a 30-year, fixed-rate mortgage at 4.12 percent, HSH now reckons that to comfortably afford the $3,997 monthly price on a median-priced area home, costing pn average $900,000, a household needs pull in at least $171,000.
Note that normally the word “affords” in this context means keeping the payments at no more than 30 percent of monthly income.
Strictly speaking, 30 percent of a $14,250/month income comes out to $4,275, but that’s before wrangling taxes. Nationally, the recommendation is just $55,390/year.
HSH considered not the city of San Francisco itself, but rather the larger SF-Oakland-Hayward census tract. Which means to buy in the city itself, potential homeowners should be making even more than the aforementioned $171,000. Goody.
Compounding this terrible news, when HSH did these same calculations back in May—that time with a 4.36 percent mortgage, average at the time—the recommendation was just $161,000.
That means the price went up at a rate of more than $1,666/month in the last six months. That’s worse than the $1,416/month spike between May of 2017 and May 2016.
Which was itself already a shocking spike over the $250/month rate of increase between spring 2015 and spring 2014. Between 2014 and 2013, the same figure rose at a rate of a bit more than $333/month.
The salary recommended is up from $137,000 in 2014, which is alarming at face value. But how quickly the spikes themselves grow is even more disheartening than the numbers.
Of course, this should all be taken with a grain of salt; the fact HSH adjusts its regular recommendations using roughly the same rubric ever upward every quarter still isn’t comforting.
The only possible consolation is that, for once, San Francisco isn’t getting the worst end of this stick. San Jose tops the list with a truly baffling $216,181 annual requirement.