Those in the middle class, that shrinking and ever malleable American identifier, now have one more reason to cringe — especially if they live in the Bay Area.
Homeownership — a defining piece of the American dream — is now even farther out of reach than ever before for many in the middle class, and nearly completely out of reach in much of the Bay Area, according to a new study.
The San Francisco metro area is the least affordable urban center for middle-class homebuyers in the country, according to a report released this week by real estate website Trulia that focused on affordability for such buyers.
The simple message: “Homeownership is getting less affordable for the middle class.”
Still, others caution that such overarching analysis oversimplifies the character of local housing markets.
Trulia found that only 15 percent of homes in San Francisco, Marin, Alameda, Contra Costa and San Mateo counties are affordable for the middle class. In San Francisco alone, it's 12 percent.
The report measured middle-class affordability by including all homes whose total monthly housing payment is less than 31 percent of the metro area's median household income.
The median household income nationwide for the middle class is $53,000. It's higher in San Francisco at $74,000 and even higher in the five counties in which data was used for the report at $86,000.
Still, the report pointed out that smaller markets inside larger metro areas are even less affordable for middle-class buyers than San Francisco.
“Although metro San Francisco is less affordable than metro New York, the borough of Manhattan is less affordable than the city of San Francisco,” Trulia noted.
Nationally, prices have only increased in the past year.
In fall 2013, 62 percent of homes nationwide were in the price range of the middle class. Now, 59 percent of homes are within reach.
Those numbers get even worse nationally when the report looked at young buyers under 35. Only 49 percent of homes are within their price range.
Only in San Francisco and a few other areas are young buyers more likely to be able to afford homes, said the report.
The numbers are expected to get worse before they get better.
“Even with slowing home prices, price increase will probably continue to outpace income gains,” the report said.
Median home prices in San Francisco stand just over $1 million compared to a national median sale price of $210,000.
All this being true in aggregate does not make it so when looking at granular data, said Patrick Carlisle, an economist with Paragon Real Estate Group of San Francisco.
“Our affordability is decreasing, yes, but it's not as low as the standard stats would make them out,” Carlisle said.
San Francisco has a very small housing market, he said, compared to other areas, which in itself raises the prices and skews the data. Most housing here is rental housing, much of it under strict rent-control laws that prevent large increases.
Additionally, how you usually define a household — and even the middle class — should be measured differently here.
A middle-class household in most places, Carlisle said, is a married couple with two kids in a suburb.
In San Francisco, and even in some of the counties around it, such a household may be a professional couple whose combined income is $120,000, which is above the median household income here.
There are lots of single-person households here and very few children, Carlisle added.
“The bottom line is San Francisco is an expensive market,” he said. “However, it's not as unaffordable [as it may seem] considering the wealth of our population. And there's no doubt people pay a premium to live in San Francisco.”
In an attempt to slow the rising cost of middle-class housing in San Francisco, the Mayor's Office said it has put forward an array of plans, including down-payment assistance programs and encouraging increased housing production.
Median household income in S.F.
Median household income in S.F. metro area (S.F., Marin, Alameda, Contra Costa, San Mateo counties)
Percentage of homes in S.F. metro area affordable to middle class
Percentage of homes in S.F. affordable to middle class
Percentage of homes nationwide affordable to middle class