October 14, 2013

We’re #1! We’re #1! We’re… PRICED OUT FOREVER!

Yesterday we shared a San Jose Mercury News (motto: Website now as thin as our newspaper!) piece showing many first-time buyers are going to remain full-time renters for the time being.  And that’s true even if we spot them places like Hayward and Mountain House.

That’s distressing news if you hate your blood-sucking landlord (but we repeat ourselves), your noisy neighbors, or your shiftless property “manager.”  Let’s balance that cup of cold crappy colloquy with some news that will turn your frown upside down.

Where Can the Middle Class Buy a Home?

131013-sf-least-affordable-ggbBy CONOR DOUGHERTY, The Wall Street Journal

If you’re in the middle class and want to buy a home here’s a piece of advice: Move to Ohio (if you’re not already there).

Some 86% of homes in the Akron, Ohio area are within reach of middle-class buyers in the area, the highest share in the nation, according to a report from Trulia, the real estate listings site. The next two cities on the list, with 85% of homes affordable to middle class, are Dayton and Toledo, respectively.

For those of you in the coastal elite who are reading this post for the perverse pleasure of finding out just how unaffordable your city is, you might be surprised to hear that New York isn’t No. 1. San Francisco is the least affordable place to be a middle-class buyer, with only 14% of homes within reach of those making the median San Francisco household income of $78,840, according to Trulia.*

However, we were slightly surprised by the next two most unaffordable places, Orange County and Los Angeles, respectively. New York was the fourth least affordable place to be middle class. After that were San Diego and San Jose and Ventura County.

Sooooo, SF is #1 but Silicon Valley is #6? But note, California completely PWN3D New York and the entire East Coast in the unaffordability sweeps. Washington DC? Shut out by the shutdown. Later, you imperialist running dogs no longer feeding at the public trough for the next few days!  When it comes to places nobody can afford to live in, we can revel in our Specialness!

131013-sf-least-listThe Trulia link above (yes, of course it works) says that while San Francisco has a 60% higher median income than most-affordable Akron, Ohio, homes there sell for (deep breath, now) seven times as much.  Only 14% of homes for sale are affordable to a household earning median income for the area.  Even worse, whoops, we mean better, San Francisco has dropped ten more percentage points in affordability since last October when 24% of homes could be purchased by a median income household.

To get slightly wonky, the real formula was what percent of homes’ monthly payments were 31% or less of the median household income, which shows the problem right there.  Everyone knows if you want to buy a house in SF, Cash is King. Monthly payment? Might as well ask if they’ll sell you the house for a hogshead of buggy whips.

San Jose’s affordability index per Trulia was 31%, but then again, none of the contenders were anywhere close to SF.  Second-place Orange County came in with only 23% of homes rated affordable by the “middle class.”

Trulia also provided a “maximum affordable home price” for each area.  Let’s take a look at what you get for that price.  Here’s a 5 BR/3 BA in SF at only $10K less than the maximum affordable amount. Of course this house is in Bayview and it has some permit issues, but you can’t have everything.

131013-sf-least-newhall

Contrast to how far your dollar S-T-R-E-T-C-H-E-S in San Jose!

131013-sf-least-waverly

Wow, a gated estate with lots of CAPITAL LETTERS and it’s yours AS IS, which means the seller won’t switch houses on you!  And just for giggles, let’s see what an “affordable” house in Akron (highest affordable house: $226K) looks like.

131013-sf-least-akron

OMG look at that house! Those bricks are going down into a big ol’ pile as soon as The Big One hits! Not only that, it would take at least a couple more hours to get to Google from here than the other two houses we showed you.  And when you look out in the boonies like this, notice what you don’t get: a decent fence around the place to keep the nosy neighbors away.

We won’t even get into the difficulty of transferring into Cupertino schools.

Comments (8) -- Posted by: madhaus @ 7:08 am

8 Responses to “We’re #1! We’re #1! We’re… PRICED OUT FOREVER!”

  1. SiO2 Says:

    Nice piece Madhaus.
    I wonder what the neighborhood of the Akron house is like? I would guess it’s fine, since bad n’hood houses in Rust Belt cities tend to be $50k or less.

    Interesting point about the fence. It’s true that many midwest/northeastern houses don’t have fences. The yards just blend together, maybe with some bushes along the line. It’s great if you have good neighbors , the kids can have a giant play space. If the neighbors are not so good, then…

  2. Jb Says:

    we escaped opps moved out of the almost RBA. we have no fences on our acre and a half lot. since we are nearly on the other coast (as opposed to fly over) 25 minutes to the beach perhaps – its cheaper but so is everything when compared to RBA. I do miss the sunshine though…

  3. maryjane Says:

    Some areas don’t need middle class housing because there isn’t any middle class. If you don’t have the skills and education to live in the RBA you can still have a very nice life – just not here. If your skill set only allows you to work in retail or food service, why kill yourself to do it here? There are states that don’t have state income tax, housing costs are low and life can be good. There’s nothing wrong with New Hampshire.

  4. Real Estater Says:

    Damn! Gilroy screwed up the ranking for San Jose.

  5. madhaus Says:

    Don’t forget San Jose metro also gets San Benito county. Largest city: San Juan Bautista, pop. 1862. Not in San Benito County: Salinas, King City, or Soledad. You want to talk about pulling down the averages? OTOH there are only 55K people in SB cty.

  6. nomadic Says:

    #3, it snows there.

  7. Real Estater Says:

    maryjane,

    No need to go that far. Tracy is only 1 hour away from SF.

  8. Petsmart groomer Says:

    > No need to go that far. Tracy is only 1 hour away from SF.

    Tracy only has one out of three.


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