Report: Bay Area Home Prices Freeze Out 1 In 5 Potential Buyers

August 20, 2018 19:00 pm · 30 comments

Potential homebuyers trying to break into the Bay Area real estate market without a high-paying tech job or financial help from family may find the American Dream of home ownership slipping right out the window.

A California Association of Realtors study released last week showed that — with Bay Area median home prices soaring over $1 million and median incomes insufficient to carry such loans — fewer than one in five Bay Area residents can afford to buy into the local market.

Many younger residents are particularly affected, unable to buy in the very neighborhoods where they grew up, some real estate agents say.

“The market is such that there are many people who were raised in Oakland and Berkeley and cannot afford to own here,” said real estate agent Deidre Joiner.

“Just yesterday, I received seven offers on a major fixer,” she said. “It was interesting; the winning offer was from two couples with children going into the property together. They said in their letter they plan to build another structure in the back.”

“These are the things people are doing to get into a property.”

The CAR study ranks regions according to an affordability index based on the median household income and the median home sales price. Nationwide, it takes a household income of about $57,000 to afford the average-priced home at $269,000.

In the Bay Area, however, a household income of about $220,000 is needed to buy a home at the median price of $1.04 million, according to CAR.

Piedmont agent Matthew Heafey of The Grubb Co. disputes the “one in five” statistics, saying he sees plenty of buyers who can afford the high price tags, such as a home he currently has listed in Piedmont for nearly $2.5 million.

“I’d say it’s four in five of potential buyers who can do it,” Heafey said. “There are a lot of people with a lot of liquidity out there who can indeed afford a $2- or $3-million house right now. A lot of your buyers
are tech-related for sure, either from here or coming in because of job relocation. Stock options have made people very wealthy over the years.”

Indeed, according to CAR, higher wages in San Francisco and Marin counties have allowed more people to buy homes in pricey regions. But Alameda, Contra Costa, Santa Clara, Solano and Sonoma counties became less affordable for the average buyer in the second quarter of the year, the study showed.

Steven Powers August 20, 2018 at 7:32 PM

The prices are outrageous, I’m sure people looking in a Piedmont area can afford it but most people can’t …. growing up in the early 1980s I worked at a small grocery store and everyone owned a home …. I doubt that there are that many home owners on today’s stores

TraumaRX August 20, 2018 at 8:00 PM

I thankfully live in Blackhawk where I was raised.

Superstitious Aloysius August 20, 2018 at 8:34 PM

Maybe it’s my remedial English skills, but the story’s headline contadicts the data given in the second paragraph.

WC Resident August 20, 2018 at 11:19 PM

Your understanding of English is fine.

Malibran August 21, 2018 at 3:05 PM

“Contadicts”

Tsa August 20, 2018 at 8:45 PM

Time to sell and get the heck out of California and move to a sane state…

YourMom August 20, 2018 at 10:15 PM

Exactly !! Trying to leave but husband is dragging his feet 🙁

AlwaysBePositive August 20, 2018 at 10:58 PM

Hasta luego.

SP August 21, 2018 at 8:14 AM

We never thought it was possible to own out here but, we bought a condo last year and already built up a great amount of equity. Your best bet if you want some kind of turn around to get the heck out of California.

MrDioji August 20, 2018 at 8:45 PM

Lol @ Matthew Healey. Of course 4 of the 5 people in the market for a $2.5M home can afford a median home at $1M. There are a lot of people with a lot of money, for sure, but there are plenty more people with much less money and no “stock options”

Blink August 20, 2018 at 8:46 PM

Trickle down economics are the only thing that allow many to buy homes

AlwaysBePositive August 20, 2018 at 11:03 PM

Please enlighten us on how that works…

Silva August 21, 2018 at 4:15 AM

Lol!

Retailslave August 20, 2018 at 9:00 PM

Born and raised here in the east bay, and we can’t afford to buy 🙁

ZZ August 20, 2018 at 10:08 PM

It is and always will be, all about the money..

KenInConcord August 20, 2018 at 10:29 PM

There is still a good market in mobile homes. A good pace to start!!

As I have always “Mobile Home Parks….. Full of Newley Weds & Nearly Dead’s!!!”

Bob Foo August 21, 2018 at 1:00 AM

I can’t agree with that. The average space rent in the bay area is like $800+ a month. That’s a complete ripoff. For that extra $800 a month, you could be building equity in something more valuable.

Cowellian August 21, 2018 at 8:01 AM

(Q) How is a tornado like a Tennessee divorce?

(A) Someone’s afixin’ to lose a trailer.

Bob Foo August 21, 2018 at 12:57 AM

No kidding.

I make about $140k a year and I can’t even THINK about owning a home.

There are certain situations where people are tricked into thinking that they can afford a home. Mobile homes and condos are really huge scams. Sure, the purchase price is lower than a single-family home, but when you factor in the HOA costs or space rental, it’s no cheaper than an equivalent single-family home. And, even worse, paying into HOA fees or space rental does nothing to build your equity.

Almita August 21, 2018 at 7:14 AM

It’s unfortunate, my daughter is ready to buy but unable to afford anything due to the high prices. I own my home but am planning to leave California due to all the high taxes! I had a pool built recently and the city couldn’t wait to increase the value of my home and tack on more taxes! ridiculous! Back 20 years ago I bought my first 2bed/2na home for 70k!

ALE August 21, 2018 at 7:47 AM

That real estate agent is cute…he caters to rich people so thinks they make up 4 out of 5 folks in the bay area. Sorry to inform him…that isn’t reality. Get on BART sometime and see the people commuting from the far reaches of the Bay Area because it is the only place they can afford to live…and not low income folks either but college educated people with good stable, relatively decent paying jobs. Can school teachers afford to live in Piedmont? How about plumbers or electricians? Or mechanics? Or scientists (I am a scientist…can’t afford to live in Piedmont)?

Oh, please August 21, 2018 at 7:35 PM

Plumbers and electricians actually make a pretty good living much of the time. My parent’s neighbors installs rain gutters at the tune of 400k a year! Makes more than me, and I have a PhD!

SP August 21, 2018 at 8:14 AM

We never thought it was possible to own out here but, we bought a condo last year and already built up a great amount of equity. Your best bet if you want some kind of turn around to get the heck out of California.

Silva August 21, 2018 at 9:12 AM

1 In 5? Must be a misprint.

Stove August 21, 2018 at 10:19 AM

“average-priced home at $269,000” . No home in the bay area sells for anywhere close to this “average-priced home at $269,000.”, MAYBE a 1 bedroom fixed upper that’s falling apart at the studs you could get for that.

Captain Bebops August 21, 2018 at 10:49 AM

I think there could be a lot more homes on the market if they made it easier for seniors to get out their homes. I know many would like to sell but where to move to? I would suspect those here who have mentioned they moved away and even out of the state had relatives or friends where they moved to. And many retirement communities are still catering to 40 year old marketing research. Many retiring boomers don’t even play golf! 🙂

ON DA August 21, 2018 at 12:23 PM

They should freeze out more.

Paul August 21, 2018 at 1:34 PM

I work a good job and save my money. My wife and I make our own meals, make our own coffee, etc etc. We are very frugal people. Hell, we threw a small wedding that cost like $2,000. We make a budget very month and we keep to it.

But we really can’t afford to buy in this market and very few people I know can either (we’re in our early thirties). You’re not wrong about the younger generation being bad with money – I see evidence of that all the time. But I’m here to tell you this isn’t just affecting them.

My grandparents bought their home in Clayton for $26,000 in 1950. It is currently worth $800,000 which is $500,000 over inflation. Rents have similarly outpaced inflation, especially over the past ten years, making even harder to save. How is a middle class family like us – never mind the working poor! – supposed to keep up?

Nunya August 21, 2018 at 4:52 PM

Thank God the illegal aliens can live three families to household!

#AllClintonsInJail

Bob August 22, 2018 at 1:45 AM

Even if you could, why would you?

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