July 22, 2015

Yes! Yes! Yes! “Silicon Valley’s housing affordability crisis worsens”

Report: Silicon Valley’s housing affordability crisis worsens
Less than 25 percent of workers and just 40 percent of households in metro San Jose are able to rent or buy average-priced housing, according to a new report from the Silicon Valley Competitiveness and Innovation Project.

The new analysis underscores some of the region’s long-term affordability trends and the impact on quality of life and business competitiveness. Compiled by Peninsula-based Collaborative Economics, the data show that the average rent in May for a two-bedroom apartment in metro San Jose was $2,917 — and that residents would need to earn $116,680 annually to afford that. Yet the median income in the area was $57,400 for individual workers and $91,500 for households, according to the most recently available statistics, the study says.

Citing data from the California Association of Realtors for the first quarter of 2015, the report says only 44 percent of Santa Clara County households could afford to purchase an entry-level home — defined as costing $833,850, or 85 percent of the county’s median sale price. That percentage shrank to 29 percent in San Mateo County (where an entry-level home was $1.11 million in the first quarter) and 27 percent in San Francisco ($1.15 million).


I don’t know about you, but this is music to my ears. As we all know, the more unaffordable something is, the more exclusive it is – and therefore the better it is. Hermes, Rolex, Ferrari, San Jose.

It’s already so beautiful that that an entry-level home is defined as $833,850 (and it probably requires $100k of work) in Santa Clara- and that includes laggard Gilroy. Come on Garlics, shine! Shine!

Where do you think we will be next year? What will an entry-level home cost? $1M? $2M?

Comments (38) -- Posted by: burbed @ 5:44 am

38 Responses to “Yes! Yes! Yes! “Silicon Valley’s housing affordability crisis worsens””

  1. Bill Lumberg Says:

    That 44% of Santa Clara County households can afford an $833,850 house seems remarkable/unbelievable to me. Taking the 2014 Santa Clara County median household income of $93,500/yr and plugging that into the CNN Home Affordability Calculator means I would have to have $0 monthly expenses and a down payment of $359,256 to “afford” the $833,850 starter home. I guess there’s a humongous jump in household income between the median and the next 6%.

  2. Bill Lumberg Says:

    Edit: 40%, not 44%.

  3. Bill Lumberg Says:

    Nevermind, 44% was correct. One of those mornings.

  4. Andrew Says:

    A large part of the story here is that a lot of people who have owned their homes [or at least owned a home and benefited from the price rises] for 30+ years would not be able to afford to buy their current home on their current income. They are ok, though, because they already own it. Most of the baby boomers are in this category.

    Once the baby boomers leave their homes then something will likely change. Either more techies move in [with less aging no-income people] to raise the median income, or prices will drop (relative to inflation) or everyone will just be putting all their income into their home.

    I can see lots of Fairmeadow Eichlers being rented out by retirees in nursing homes… to a group of 4 Google Software engineers, or a family of 4.

    I’m not sure how the future will go, but with commute times getting worse by the week, I wouldn’t want to be commuting from south San Jose to Goog/Apple/FB.
    Yet Goog/Apple/FB families are having kids in bulk, so where will they live?

  5. Bill Lumberg Says:

    Just to follow up, with a 20% down payment of $166,770 (I imagine 44% of Santa Clara Country residents that lying around, right?) according to CNN the family would have to make $142,000/yr with no monthly expenses. That’s a far cry from the $93,500 median. With a 10% down payment one would have to earn $155,500/yr. Again, something doesn’t add up.

  6. Bill Lumberg Says:

    “Once the baby boomers leave their homes then something will likely change. ”

    Their deadbeat kids will move in or rent it out.

  7. Alex in San jose Says:

    Just a few years ago one could buy a house on a few acres in Gilroy or Morgan Hill for a quarter mil. You could keep chickens! A garden! Bask in the racism! When this bubble bursts or at least deflates with a soft farting sound, that will be possible again. Just no t-shirts with flags on them now, be nice.

  8. Kenny Says:

    I’ve read somewhere that 1/4 of silicon valley residents earn $280K+ annually so the prices are not that ridiculous considering the supply of homes available. The rest are just sharing with a roommates/family or long time owner before the bubble.

  9. Real Estater Says:

    >>With a 10% down payment one would have to earn $155,500/yr.

    Correction. 10% down payment is not permitted by the bank, so it’s not a valid case. With the typical 20% down, a FAMILY needs to make $142K, which means each working adult only needs to make $71K — that’s teacher salary.

  10. Real Estater Says:

    Alex says,
    >>Just a few years ago one could buy a house on a few acres in Gilroy or Morgan Hill for a quarter mil. You could keep chickens!

    Still possible in the Central Valley just a couple of hours away from SF, about the same distance between SF and Gilroy.

  11. Real Estater Says:

    >>Once the baby boomers leave their homes then something will likely change.

    Baby boomers mostly have kids. Homes will be very affordable to the next generation — as in FREE.

  12. Real Estater Says:

    BELIEVE IT – Waterfront condos in Richmond’s Marina Bay are being offered for $250,000 to $350,000

  13. Alex in San jose Says:

    A guy I know has lots of Richmond stories. Most of them involve him being glad be packs a .357 mag.

    I’d rather buy in da EPA cos I like paly alty and I’d be close.

  14. deertick Says:

    The concept of boomers moving out of their houses en mass was a common idea back in the last bubble too. I was also one of those folks who believed that.

    The problem with that is that since these same boomers are protected by Prop 13 they’ll do just like the generations before them: they’ll stay in their house until their 90’s. In my neighborhood its typical of what’s seen in most of the Bay Area. Large swaths or housing owned by seniors. When there is a local estate sale its common to walk into one of these houses and find it hasn’t been renovated since the 50’s and the whole house needs a major overhaul. Simply put a lot of these older homeowners can’t afford to do much to their houses and yet they stay forever because they couldn’t afford to sell and re-buy if they wanted to.

  15. maryjane Says:

    Deertick –

    I live in a neighborhood with a lot of very old homeowners. It isn’t so much that they can’t afford to renovate. Most think that what the decorator did back in 1960 was just perfect so why change it? My neighbors all maintain their houses but they’ll keep the wallpaper on the ceiling no matter what.

    Something I have seen is that when the children inherit the house many can’t afford the taxes. The ones that can already have their own houses. I don’t know of anyone who’s waiting for the day they can move into Mom’s place.

  16. Bill Lumberg Says:

    “Something I have seen is that when the children inherit the house many can’t afford the taxes.”

    See the previous post regarding Prop 13.

  17. deertick Says:

    My comments were in regard to the many estate sales I’ve been to where the house its in is literally falling apart with leaks, peeling plaster, paint and who knows what. This was a former working class east bay city and is now a bedroom community for San Franciscanites who wants kids. So its a case of the older, working class residents now living in a sea of Bimmer drivers and techies.

  18. Alex in SJ Says:

    Deertick you’re describing the 70s-tastic mcShitsion I’m sitting in here in Fremont as I type …. soooo much deferred maintainance …. I’m here once a week to do work for the guy I work for and the place is such a money pit, just in every day running costs. Guy makes $150k or so a year and saves none of it, works his day job plus the side job he does with me plus any contracts he can work also.

    I can see Prop. 13 keeping him in this place, and them still using the old piece’o’shit Gaffers&Sattler stove.

  19. G Says:

    Wow, I haven’t read this blog for like 7 years, but this dude who calls himself “Real Estater” is still trolling it. Amazing! Somebody write this guy a biography.

  20. Single Pane Lass Says:

    Hell, there are a ton of us who couldn’t afford to buy the house we bought just a few years ago. My house’s value has *doubled* in 4 years, in MV. Crazy.

    And no, I’m never ever selling my Eichler and neither are my grandkids!

  21. CBVA_AA Says:

    Ok, I got it! The only way I can own a house here is to marry a 90yo homeowner with no children!

  22. nomadic Says:

    No one made San Francisco the most expensive place in the country on purpose. That’s the tragedy.

    Tragedy? That’s not a bug, it’s a feature!

  23. Alex in San jose Says:

    The progressives are the only reason you don’t risk getting your throat slit for the bag of groceries you’re carrying. Imagine Starbucks with a two stage security gate and armed guards. Hell, the new Whole Foods here in San Jose has two armed San Jose pd officers patrolling during all open hours.

    Progressive SF beats the hell out of libertarian Ayn Rand hell SF.

  24. Alex in SJ Says:

    Welp, in the wake of 6 shootings recently, San Jose’s going to put a ton of cops on the streets, so mind your P’s and Q’s.

    I say rightly, as San Jose’s a stabbing town. Shooting’s just gauche.

  25. Bill Lumberg Says:

    lol I think I saw that on the sign driving in. “San Jose – A stabbing town.”

  26. Alex in SJ Says:

    Actually the motto should be “San Jose – Where the digital divide is far and wide” I’ve never lived in a place, big or small, with slower, more expensive internet and a huge portion of the population has just said fuckit and lives like it’s the early 90s. Yes, we have payphones!

  27. nomadic Says:

    Nothing new here, so check out Buzzfeed from last week, writing about buying in SF:


  28. Alex in San jose Says:

    Another sign of a bubble is, the puff piece on NPR today about a startup, called something with the word blue in the name, that gets you flower deliveries from a florist near you. Yes, instead of that evil 1-800-flowers, you go to this blue thingy assuming you can remember the URL which has nothing about flowers in it, and you pay them a cut to I dunno, do what any normal person would do and get on yelp for florists in your city, or look in the yellow pages, or flip the old Rolodex because you know your local florists and have for years.

    No doubt tons of money are being flung at them because they’re young and have a ping pong table in their lobby and they have a newwwwwwwww idea!!

  29. Alex in San jose Says:

    Here’s an idea, designer low carbon footprint gluten free bunk beds, because according to a couple good discussions on Reddit, people are literally living six to a room now, sleeping on bunk beds.

  30. nomadic Says:

    Oh yeah, Alex. Check out the bunk bed utopia in this article.


    I like the shipping container idea. I saw a well-done version of that near Amsterdam (student housing).

  31. Alex in San jose Says:

    Nomadic that article has been going around and around and around….. for the past week or so.

    What I mean more like is, if I were a multi millionaire so I had an actual garage, I could set up a garage business building rather nice bunk beds to sell to hipsters, programmers, etc.

    Although I guess if I were a multimillionaire, I’d not need a garage business, would I?

    I think what I’m supposed to do is write an app where the sucker, er customer, specs their bunk bed which is then built by child slaves overseas and sent to them, at a premium price.

    You know those stores with all the best hand woven shit made overseas? The little coin purses and such? Every knot contains a child’s tear.

  32. nomadic Says:

    Maybe you should just advertise to assemble Ikea crap for people.

    Hopefully this article will be more fresh for the homeowners on here:

    Certainly fresher than burbed’s posts…

  33. Alex in SJ Says:

    I’ve heard of those Ikea assembly jobs and it sounds good but I’d either (a) have to take hours to get there/back on public transpo, or (b) spend a ton to own a car to zip around to do the work … in either case I’d make about $3 an hour.

    There are tons of good ideas in this valley, all of which pay Bangladesh type wages.

  34. burbed Says:

    >Certainly fresher than burbed’s posts…


  35. nomadic Says:

    Sorry, burned. I figured we need to beg or bully… 😉

  36. nomadic Says:

    (Whoops, now I put a typo in your name.)

  37. Tracy Says:

    My favorite about Burbed used to be the making fun of RE copy . Even with the prices well over a 800K for a started home, spell check and English are not necessary to sell.
    so here is one- How many mistakes can you spot?

    “Beautiful tucked away home with sweeping valley views. Newly remodeled, Knocking opportunity to own a single family with new paint inside and outside, hard wood floors, new carpet, new title floor in the office room. All the bedrooms over looks the city view. One bedroom study area or office. Update kitchen. Corner lot. Moved in condition. You must love this home with breathtaking location you can’t miss. (buyer’s to verify the square feet and number of bedrooms)”

  38. Alex in San jose Says:


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