As San Francisco’s real estate market gears up for a fall frenzy, prospective buyers have surprisingly good news: The city has actually gotten more affordable in the last six years. (Though, yes, it’s still quite expensive.)
San Francisco is one of only two major U.S. markets where the number of renters who can afford a median-priced home is higher than it was before the pandemic. As of the second quarter, about 11% of San Francisco’s renter households could afford a median-priced home, versus 9.1% at the end of 2019, according to new research from CBRE.
The city’s combination of relatively high incomes and stable (or even declining) home prices drove the affordability increase, according to the firm. The monthly cost to buy a home in San Francisco — which CBRE calculated by combining the mortgage payment, insurance, taxes, and general maintenance — has barely budged since 2019, while it increased significantly in other parts of the country.
“We did see some post-pandemic price corrections that happened within our market driven by an exodus of people leaving the city,” said Vanguard’s Philip Farr, noting that condos in particular saw prices fall. More recently, red-hot AI companies are doling out hefty pay packages or offering stock sale programs to let employees cash out some of their equity, making more San Franciscans home-purchase ready, he said.
While SF is bucking the trend of decreasing affordability, it’s still a tough market in general: The proportion of people who can afford homes here lags behind the national average of 12.7%.
When taken with reports of the ultra-competitive and “absolutely insane” rental market, one might be tempted to start browsing Zillow listings. After all, SF rents recently clocked in at the highest level since April 2020.
Don’t get too excited, though: A new mortgage payment rang in at an average $10,420 per month as of Q2, more than triple the $3,498 apartment rent, according to CBRE. A whopping 6.2 years of rent would be required for a 20% down payment, which is at the top end of the national spectrum, behind only Orange County (8.3 years) and San Jose (6.9 years).
Meanwhile, Detroit, the only other city CBRE found to have increasing affordability, has costs that homebuyers in SF would drool over: New mortgage payments there are a mere $2,381 per month.