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To buy an average home in San Francisco, you need 9-plus years of income

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Buyers need to pull in nine-plus times the median income to buy a median-prices home in SF and San Jose

Photo by Roschetzky Photography/Shutterstock

According to CityLab, the average San Francisco household would have to spend more than nine times its annual income to fully pay off a median-priced home in the city.

Editor-at-large Richard Florida notes that, traditionally, house hunters are supposed to set their max price by multiplying their annual income by 2.6.

CityLab credits that formula to Forbes, which claims “[typically] median homes in the U.S. cost 2.6 times as much as the median annual income.” Money magazine prescribes a similar but distinct 2.5-1 formula.

But the finer points of what’s behind that decimal probably don’t matter as much in this case, because no place in the Bay Area comes close. By CityLab’s math, the average San Francisco home costs 9.2 times the city’s median income.

That’s the third-highest factor in the country, after just Los Angeles (9.6 percent) and San Jose (9.5 percent).

“Our calculations reflect the years of income it would take to pay for the purchase price of a home only,” Florida also cautions. “They do not account for the added expense of mortgage interest.”

And the income estimates are pre-tax as well, so the cost is even more intimidating. But one problem at a time.

Photo by Sodake/Shutterstock

Is CityLab right? Well, the site’s breakdown references the U.S. Census’ 2016 estimates for city income, and employs Zillow’s estimates about home values—not home prices—in cities.

Right now Zillow ranks a median-priced SF home at roughly $1.33 million, and the census puts SF’s 2016 household income at a whopping $103,801/year.

That actually comes out to a home price total of more than 12.8 times household income, so evidently some variables changed when CityLab did the math.

Looking at another estimate, the California Association of Realtors most recently calculated the median asking price of a San Francisco house at $1.6 million, the equivalent of more than 15.4 times the Census-provided median income.

The Mayor’s Office of Housing’s own income estimates project that an up-to-date median for SF is $94,700 for a two-person household and $106,550 for a three-person household, which makes CAR’s estimate 16.8 times or 15 times the income, respectively. The median household size in the city is 2.33.

Sadly, no number shows up on any balance sheet to suddenly make a San Francisco home more attainable. CityLab’s 9.2 figure is actually something of a best case scenario.

Also of note, CityLab’s conclusion about what’s behind these frustrating figures: “Land-use restrictions and NIMBYism.” There’s no census source for that one, so call it a personal analysis.