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Why owning a home in San Francisco has never cost more

Between utility and insurance costs, homeowners are finding themselves increasingly on the hook for things outside of their control

A mini excavator on a pile of dirt, with a worker behind it, at a modern home construction site.
First-time homebuyers are already at their limits because of high interest rates. | Source: Camille Cohen/The Standard

Home prices in San Francisco may have settled down from the record highs set during the pandemic, but the hidden costs associated with homeownership are skyrocketing.

An analysis from Redfin found that the salary necessary to afford a median-priced home in the Bay Area is $404,332 a year, a nearly 25% increase from the year before. A scan through Zillow confirms that math—the average price for a single-family home remains stubbornly well over $1 million.

Paying for the upfront price of a home is still a buyer’s primary concern. But now, because of factors mostly outside of homeowners’ control, auxiliary costs—like utilities, property taxes, home insurance and maintenance work—are threatening to overtake already hefty monthly mortgage payments. 

It’s all adding up to a more complex calculation for those looking to dip their toe in the market, with many first-time buyers already at their limits because of high interest rates. What normally would be a dream come true is quickly becoming a rude awakening for some. 

Last year, home ownership affordability in the U.S. plunged to its lowest level since 1984, according to research from financial markets company ICE Mortgage Technology.

The cost of peace of mind

Many of the largest home insurers in California have stopped writing new policies and some are dropping customers. Those continuing to do business are hiking rates for remaining policyholders. 

While previously these challenges were localized to wildfire zones, the broader turmoil is making its mark in San Francisco.   

Daniel Masarsky, president of San Francisco-based ESI Insurance Brokers, said even though the city itself is not at high risk of wildfire risk, the limited number of active carriers has made it nigh-impossible to find policies for some homeowners.

In order to get clients covered, Masarsky has had to turn to non-admitted insurance companies not governed by the Department of Insurance, meaning there is no state guarantee if the company becomes insolvent. This alternative can be 20-30% higher than the cost of a typical policy. 

Another option that has become increasingly common for San Francisco homeowners is the  California FAIR Plan. The so-called insurer of last resort is meant to provide bare-bones coverage at higher prices for those who can’t access it in the private markets.

Victorian houses on a sloped street with colorful facades, cars parked, and tree branches overhead.
The exodus of big home insurance providers is pushing some toward non-admitted companies or bare-bones but expensive government plans. | Source: Camille Cohen/The Standard

“It was meant for high-risk fire areas like near Tahoe, but even in San Francisco, it’s become a default,” Masarsky said. 

Carriers are also becoming more picky about who they decide to cover. For example, a home with knob-and-tube wiring, common in older San Francisco properties is generally a no-go. As are certain types of electrical breakers. That means costly upgrades just to get coverage.  

Masarsky has experienced the challenges firsthand. After AmGUARD Insurance—which held the policy for his duplex—left the state, he was forced to find a replacement policy at four times the cost. 

Insurance Commissioner Ricardo Lara has proposed what he terms his "Sustainable Insurance Strategy," which is meant to preserve insurance access in the state through actions like allowing new models for underwriting policies and rewarding consumers for mitigating wildfire risk. But Masarsky said even if these new policies stabilize the market, the rates of the past are likely gone forever.

“I’m telling my clients to eventually expect up to 50% rate increases,” Masarsky said. “So the cost of living in San Francisco—at least with respect to insurance—is going to continue to go up. I don’t expect that to change anytime soon.”

Paying the bills

The sharp and continuing rise in PG&E rates has led to a severe case of sticker shock for San Franciscans opening their monthly electricity bill. 

In a California Public Utilities Commission meeting in March, commissioners approved $4-$6 in additional monthly fees for the typical ratepayer which led to two hours of vociferous—at times enraged—public comment from residents.  

Since early 2021, PG&E bills in California have increased by 38%—an average of $52 per month, according to regulatory filings—20% more than the rise in the consumer price index over the same period. 

Water droplets on a surface reflecting a blue and white logo, creating a pattern of logo repetitions within each droplet.
PG&E is now the state's most expensive power provider, leapfrogging San Diego Gas & Electric. | Source: Justin Sullivan/Getty Images

The recent rate increase means that PG&E has now leapfrogged San Diego Gas & Electric as the state’s most expensive power provider. The rate increases have ramped up since the company exited bankruptcy in 2020, which was tied to its role in deadly wildfires in 2017 and 2018.

Additional hikes could be on the way before the year is out. PG&E has a pending application to raise monthly rates a further $14 a month starting later this year to recover costs from damage caused by last year's storm season.

A current proposal to create a monthly fixed fee for much of the state is likely to also negatively affect higher-income customers who reside in cooler coastal regions like San Francisco in the form of higher rates.

Water and sewage rates have also increased for San Francisco ratepayers after hikes were approved last May. Costs are expected to increase annually by around $150 for the next three years for a typical single-family household. 

Mark Toney, executive director of The Utility Reform Network, said just like property taxes and insurance costs, utilities are becoming a more significant part of the operating cost of homeownership.

“A mortgage for the most part is predictable over time; you can budget for that,” Toney said. “The one thing you know about a utility bill is that it will escalate year after year.”

When it comes to annual property taxes, Prop. 13 has long shielded California homeowners from paying fees reflective of the exploding values of their homes. That’s how a home in San Francisco’s exclusive Presidio Heights neighborhood, for example, can be worth nearly $10 million today but still have a tax bill based on a 1970s-era sale price of around $300,000. 

But new buyers are on the hook for a market-rate reassessment once they close on a new home. According to real estate data firm Attom, San Francisco is among the top 25 most expensive counties in the country, with an average property tax bill of $10,296 as of 2022.

High estimates

Shawn Ajdari, owner of AYA Homes in West Portal, has been remodeling homes in San Francisco for the past six years. The general contractor moved to the city to be closer to his daughters after spending over two decades in Georgia and Wyoming.

During the height of the pandemic, there was a drastic increase in costs for materials because of supply chain issues, Ajdari said, but those have subsided. Lately, the more significant rising costs on his mind are labor and time. 

“The moment you cross the Bay Bridge, the costs double,” Ajdari said, adding that he’s seen workers disperse around the region since the pandemic. Most of the help he brings on tends to commute from the East Bay or Central Valley. 

A building under construction with scaffolding and a black protective mesh, beside trees and a fenced-off area.
Construction labor costs more in San Francisco than in most parts of the Bay Area. As a result, prices for home improvement or renovation projects continue to rise. | Source: Michaela Vatcheva for The Standard

“Getting the right people, at a reasonable price, who can do the job well is getting tougher,” he said. “If they don’t do a good job, you might have to redo their work, which adds up.” 

On top of paying a wage worthwhile of the trip (at least $300-400/day per person), Ajdari said he now also has to carry multiple insurance policies to cover the high San Francisco home values. In most other places outside of the Bay Area, one $1 million liability policy would suffice. 

For a standard bathroom remodel these days, Ajdari has been quoting his clients at least $30,000 for the cost of labor alone. Any additional electrical work or customizations means extra fees. 

The same job would cost half the price in most other states, Ajdari said. In Georgia, hiring a tile setter ran him approximately $3-$5 per square foot. In San Francisco, that number can go anywhere from $18-$30. 

According to data from home-improvement company Thumbtack, annual home maintenance costs in the San Francisco-Bay Area continue to rise, topping out at $6,785 last year, up 12% from the year prior. Heating systems, air conditioning and rooftop repairs saw the biggest price increases. 

Another layer Ajdari says is adding to costs: the city’s new “Green Halo” waste management policy, implemented this year, which requires contractors working on major projects to track and report on their waste to its disposal point before they can get a final building inspection. 

“Why are they putting the onus on us?” he said. “It’s a whole other job outside of our expertise and adds more time to the project.” 

Given the rash of price increases nearly across the board, Matt Castillo, a real estate agent for Keller Williams, said he’s often preparing his clients for the worst. He doesn’t talk as if interest rates will go down anytime soon and now urges buyers to get quoted for home insurance even before putting in an offer.  

In pre-pandemic times, everything outside of the mortgage used to be viewed as nothing more than formalites, Castillo said. Now, they can be variables that swing an entire deal. If an insurer won’t cover your new house, for example, that should be a nonstarter. 

“We used to only worry about these things if a client was moving into, say, an area prone to fires,” Castillo said. “Now, everywhere is being treated like a high-hazard area.” 

Kevin V. Nguyen can be reached at
Kevin Truong can be reached at