March 30, 2015

Median Home Price to Median Income Ratio in San Francisco Bay Area

Great news everyone!

The Median Home Price to Median Income ratio just exceeded 9x in 2014 Q4! To be precise, it was 9.16x!

And with house prices growing 20% year over year, my guess is that when when the NAHB/Wells Fargo Housing Opportunity Index data for 2015 Q1 comes out, the Real Bay Area will easily exceed the peak of 9.27x set in 2007 Q2!

Where will this ratio go? It’s obvious that by the end of this year, it will be 10x… but when will it happen?

Median

SF

SJ

Great work everyone! The real question is: How can we drive this to 20x?

San Franciscans have already done their part by blocking new homes from being built. Redwood City-ers have succeeded with their protests of building more homes. Mountain View, Palo Alto, Millbrae, Burlingame: You guys need to pass laws to destroy existing apartments (because renters aren’t humans anyway).

What are your suggestions? Let’s hear them in the comments!

Comments (32) -- Posted by: burbed @ 5:31 am

32 Responses to “Median Home Price to Median Income Ratio in San Francisco Bay Area”

  1. Skip Smith Says:

    Inventory is much less as compared to 2007, right?

  2. T Man Says:

    “because renters aren’t humans anyway”

    It’s things like that that make me love this blog.

  3. Petsmart groomer Says:

    Mountain View seems to be doing everything it can: http://www.mv-voice.com/news/2015/03/06/new-council-hesitates-before-giving-ok-to-apartment-redevelopment-plan

    From 102 units in 2006 to 64 units in 2007 and now only 29…

  4. nomadic Says:

    Those council members are hypocrites. The ones interviewed all say it should’ve been denser housing, yet all but one voted in favor of it anyway. Nothing will ever get better by “wishing” for it and voting that way.

    I guess I should be happy – less housing in MV means more spillover to other areas, driving up prices all over.

  5. wave Says:

    That income line looks very, very flat in comparison to the house price line…

  6. CBVA_AA Says:

    Dumb question: is the “income” statistic including the compensation coming from stocks, bonuses, retention, etc?

    I’m trying to understand whether I’m the only idiot that didn’t get rich enough to buy cash after 8 years in Silicon Valley…

  7. deertick Says:

    Here’s the thing. Don’t try to make sense out of the income to cost of housing ratio in the Bay Area. Its doesn’t make sense and probably never has. It has always been insane. Like: OMG-look! the income of the bay area is $45,000 a year and yet houses cost a zillion dollars! How do people afford it? Its magic.

  8. CBVA_AA Says:

    …I’d like to learn that magic trick though…

  9. dwc Says:

    Even rents in the east bay (like dublin, san ramon, danville) are going through the roof. $2000 per 1b/1b in San Ramon. Ridiculous. Sure, masters want all of us to slave away to pay the rent.

  10. Jordan Says:

    Great look here! “Because renters aren’t humans, right?” It’s a little sad how many people seem to think this….

  11. CBVA_AA Says:

    I kind of remember 2-3 years ago Paloaltans were able to block the development of a complex for senior citizen-low income (..but my memory could be faulty here), saying that “the traffic could have gotten much worse in that area” because of that..
    I guess something got wrong in the meantime, regardless of that complex not being built: it takes 1 hour just to cross the town…

    What’s the matter in candidly admitting “we are doing this just for money”. I mean, everybody knows, even the example from Mountain View reported above is clear. Be honest, just say it!

  12. maryjane Says:

    I would just like to say “Thank you” to all the techies out there who have their millions to spend. The rising tide sure has floated my boat.

  13. maryjane Says:

    Something slightly off topic but I thought it worth mentioning – I was taking money out of an ATM in the Marina in SF and the person before me left his receipt behind. The amount in his checking account was just shy of $1,000,000. (I didn’t peek, honestly, it was just staring up at me.) I wonder how many people get yearly infusions of $1million+ into their checking accounts. They really can afford to just write a check for a house so the sky is the limit.

  14. dollarbin Says:

    @CBVA_AA I think you’re thinking of the Maybell site: http://www.paloaltoonline.com/news/2015/02/01/another-plan-for-maybell-housing-draws-fire

    @maryjane That checking account millionaire is as foolish as he or she is rich: I believe that checking accounts are only FDIC insured for $250,000 leaving three quarters of a million bucks vulnerable if the bank goes belly-up.

  15. Petsmart groomer Says:

    […] an example of the kind of density they would support, where there are 14 homes on 3.5 acres.

    That’s 10,890 sq ft per house so I have no doubt anyone would support that density (except maybe someone coming from Atherton). The submitted plan is for about 4,465 sq ft per house, which isn’t all that bad these days.

    This neighborhood seems to be full of serious entrepreneurs:

    “The best solution is to sell this land to farmers and sell fruit to make your money,” a resident said.

  16. Bill Lumberg Says:

    Here’s one way to perform the magic trick.
    http://www.sfgate.com/bayarea/article/Feds-say-wife-of-S-F-doctor-accused-in-drug-ring-6190794.php

    “Some of the ill-gotten gains were used to buy a $1.6 million piece of property in Millbrae, the affidavit says.”

  17. Sreeni Says:

    One chart missing from the above graph is about the density. We should have had some data about total employment in this area against housing stock we have.

  18. CBVA_AA Says:

    @Dollarbin

    ..mmm..no, I do not think that’s what I was referring to. I remember the discussion happened around the election time, in 2012. As I said, though, all I remember it’s that it was supposed to be a housing solution for elder/retiree people and the excuse to oppose to it was the additional traffic..

    @dollarbin
    ..I do not know if all of this money is actually from laundering schemes…all I think is that if it’s indeed laundering money coming from abroad..well..I do not see authorities so willing to stop it from coming..

  19. Petsmart groomer Says:

    CBVA_AA, it sure sounds like you were talking about the Maybell site:
    Voters reject affordable senior housing project in Palo Alto.

  20. Skip Smith Says:

    http://blog.sfgate.com/ontheblock/2015/04/10/dilapidated-marin-county-cottage-sells-for-70k-over-asking/

  21. Bill Lumberg Says:

    @dollarbin – It’ll never change. All the stakeholders and their lobbying groups have too much power and too much at stake to allow new regulations on foreign buyers. Remarkably, the PATRIOT Act in its original form would have required due diligence on real estate transactions, but that was predictably killed by the industry.

    http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html

    http://www.nytimes.com/2015/03/11/business/treasury-urged-to-scrutinize-foreign-real-estate-buyers-for-money-laundering-risk.html?_r=0

  22. nomadic Says:

    Here’s a new listing for you, Burbed.
    http://www.sfchronicle.com/bayarea/article/Buying-a-hoarder-house-not-a-turnoff-for-most-6190405.php?t=5e80517858baa6eec6&cmpid=twitter-premium

  23. CBVA_AA Says:

    …”Mors tua, vita mea”

  24. burbed Says:

    >Under California law, if someone dies on the property, it’s considered a material defect that must be disclosed to potential buyers or renters, but only if the death occurred within three years of the date an offer is made to purchase or rent the home. The exception is for AIDS-related deaths, which don’t have to be disclosed.< Wow, I did not know of the AIDS-related exception.

  25. CBVA_AA Says:

    @Burbed

    AIDS is considered a disability, and as is disclosing that information is de facto considered a discriminatory action.

    Full story here:

    http://homeguides.sfgate.com/laws-regarding-death-disclosures-real-estate-transactions-california-46748.html

    By the way: few articles around talking about a possible bubble in Chinese stock market. This, together with stats saying 2/3 of China’s millionaires moved/moving out in the next 3 years (as soon as I retrieve the article, I will post it), and other stats reporting lower investing from foreign companies (..maybe all the anti-monopoly investigations annoyed them?).
    I guess the 2015-2016 will be an interesting biennium…

    Question: are LLC entities required to pay full property taxes on houses they buy? Or they do have some discount?

  26. burbed Says:

    I guess I didn’t know that the disclosures had to say what the person died from. I thought it would be binary “Did someone die – Yes or No”

  27. CBVA_AA Says:

    The reason of the death seems to play a huge role in making the house carry “bad luck”, for some category of buyers. This, at least, what my agent told me…

    If it was an elder person that died peacefully in his bed after having lived there his/her entire existence, well..all good.

    Instead, if he was a just married couple that died after falling from stairs in a desperate run for their first honeymoon “event”…well…this brings a lot of “unresolved” businesses that possibly make the ghosts willing to come back…and quite disappointed…

    Out of jokes, I think that everything comes to the following explanation of the law: “Material means that if you knew about the fact or defect, you would no longer want the property, or – at the very least – you wouldn’t be willing to pay as much for it”…

  28. Sd Says:

    It’s cheaper to buy land with a home in rural area outside Bay Area and a van with sleeper bed than to rent or buy an overpriced crapbox in the Bay Area.

  29. Real Estater Says:

    We are #1!!!
    And #2, and #3!

    http://money.cnn.com/2015/04/15/real_estate/housing-markets-fastest-sales/index.html

  30. Pascal Says:

    Your totally right, renters aren’t human. Heck humans just don’t matter. I mean, protecting some random national wildlife frog is a lot more important than creating shelter for humans. Let’s keep preventing builders from building, by raising the price of housing even more. This way we can force even more people to move out of California.

  31. Real Estater Says:

    Santa Clara has recaptured all jobs lost since the dot com days and reached a new high:
    http://www.mercurynews.com/business/ci_30027782/santa-clara-county-job-market-booms-reaches-all

    As we all know, real estate has recovered from the temporary downturn during the banking crisis and appreciated several times over.

    What does that mean? Bay Area economy is resilient and invincible. Don’t let anybody convince you otherwise. Buy with confidence, live here and prosper.

  32. michael Says:

    Santa Clara is ground zero for a commercial real estate construction boom. One and two story building replaced by multi story office space. Many office spaces still available for lease. Invincible, you forgot your sarcasm tag.


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