Most Middle-Class, Millennial Homebuyers Priced Out of Bay Area
Although Bay Area residents earn some of the highest wages in the nation, our real estate markets rank among the least affordable for both middle-class and millennial homebuyers, a recent report says.
A Trulia study found that middle-class residents in the San Francisco metro area could afford just 15 percent of homes for sale in November, making it the country’s least affordable market for that demographic. In the San Jose region, middle-class buyers could afford 30 percent of properties on the market, sixth lowest in the nation. Across the U.S., 59 percent of homes for sale were within reach of the middle class, Trulia says.
Jed Kolko, Trulia’s chief economist, explained that high-income regions tend to be less affordable than lower-income areas because wealthy homebuyers have the ability to overbid and drive up prices, shutting out those on the other side of the wage spectrum.
“As a result, high-income metros such as San Francisco and San Jose are among the least affordable, even after taking income into account,” Kolko wrote.
Trulia also drilled down into the 10 least-affordable submarkets for middle-class homebuyers, and not surprisingly, the Bay Area is well represented.
The city and county of San Francisco ranks as the nation’s fourth least-affordable submarket, with middle-class residents able to afford only 12 percent of available homes. Marin County, where 15 percent of homes on the market were within the grasp of the middle class, ranked as the country’s sixth least affordable, followed by Napa County at No. 8 (16 percent) and San Mateo County at No. 10 (17 percent).
The report also found that millennials are having an equally hard time breaking into the Bay Area’s high-dollar real estate scene. In the San Francisco metro area, millennials could afford to purchase 16 percent of available properties in November, making it the country’s least-affordable market for that age group. Kolko noted that although the median yearly income in San Francisco is actually higher for millennials ($90,000) than it is for all households ($86,000), most younger buyers are still squeezed out because of high prices.
Many home shoppers shut down in San Francisco have been heading across the Bay Bridge in recent years, leading to price upticks in the East Bay. As a result, Trulia ranks Oakland as the ninth least-affordable market for millennials, with 27 percent of properties affordable on the reported $61,000 median income.
(Photo: Flickr/Miran Rijavec)