05/06/2016
Even with the run-up in home prices over the past few years, the majority of Bay Area counties are still more affordable than their historic normal levels. However, home price growth is outpacing wage growth on an annual basis, which doesn’t bode particularly well for affordability improvements.
In its Q1 2016 Housing Affordability Index, RealtyTrac found that only 9 percent of U.S. housing markets were less affordable that their historic norms. At the peak of the housing bubble in 2006, 99 percent of markets were less affordable than their historic levels. The company calculates affordability by the percentage of average wages needed to make monthly mortgage payments on a median-priced home assuming a 30-year, fixed-rate mortgage and a 3 percent down payment. Scores higher than 100 mean a market is more affordable than normal, while those below indicate that it is less affordable.
Even with some of the lowest affordability conditions in California, most Bay Area counties are more affordable than their historic levels, though in some cases not by much. Solano was the Bay Area’s most affordable county, with an index score of 111, followed by San Mateo and Santa Clara (106), Marin (105), Napa and Sonoma (103), and Contra Costa (102) counties.
The other two Bay Area counties — San Francisco and Alameda — have the dubious distinction of being among the 20 least affordable in the nation. Alameda County notched an affordability score of 100, while San Francisco was even less affordable, with a 92. RealtyTrac puts San Francisco as the most expensive county in the Bay Area, with a median sales price of $1.1 million in the first quarter of this year.