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To Get a Home in San Francisco, First Get a $200,000-a-Year Job

115 points by anishkothari 12y ago

marc0 12y ago
... and I did think SF is expensive ... average semidetached house with small garden in a suburb of Munich, Germany (1h commuting): 950k USD, quite an average price here. And the salaries are lower than in SF while cost of living is higher. 770k USD in SF looks like a bargain :-)
biot 12y ago
Still cheaper than Vancouver with a $922K benchmark house price[0] ($847K USD) in Greater Vancouver area, or $2.1M in Vancouver West. Factor in Vancouver's lower salaries and higher mortgage costs, and SF looks particularly cheap in comparison! [0] http://www.theglobeandmail.com/report-on-business/vancouver-housing-sales-rise-378-per-cent-in-october-from-a-year-ago/article15243231/ http://www.theglobeandmail.com/report-on-business/vancouver-...
- msie 12y ago
  Nobody seems to consider South East Van part of Vancouver or Burnaby, which is close by. Some houses in those places go for less than $600K. I've seen some townhouses go for $460K. http://www.zoocasa.com/en/vancouver-bc-real-estate/2601981-3387-flagstaff-place-vancouver-bc-v5s4k9-v1054432 http://www.zoocasa.com/en/vancouver-bc-real-estate/2601981-3...
- jmj4 12y ago
  Rent seems to be at least 50% higher in SF though[1]. How is that? [1] http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Canada&country2=United+States&city1=Vancouver&city2=San+Francisco%2C+CA http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
  - eigenvector 12y ago
    Both rent and home prices are driven by supply and demand, that is, what the market can bear. In both cases supply is the same, but for ownership, the market is global. You can live on the moon and own property in Vancouver. The price of Vancouver property is constrained only by the limits of how much foreign capital is available to be safely parked in Canadian real estate, not by the population of Vancouver. As you can imagine there is considered more of the former than the latter. However, the market for rentals is constrained by the number and salaries of people who actually live in Vancouver. Nobody rents an apartment in a city in which they don't actually reside. You can't charge $3,000/month for an apartment in Vancouver because no one will be able to afford it. In Vancouver a junior engineer earns $60,000/year. Vancouver salaries aren't higher than anywhere else in Canada (in fact they're lower than Calgary and Toronto, both of which have cheaper housing, and about on par with Montreal which has MUCH cheaper housing), so despite the crazy property market this keeps rents down. SF's crazy rents are driven by the tech industry salaries that are much higher than anywhere else in the country (or in the world for that matter).
  - potatolicious 12y ago
    SF prices are driven by intense demand due to the tech industry. Tech continues to import more and more people but there isn't enough room for everyone. Vancouver prices are driven by speculation, primarily from international investors. The actual demand for housing in the city is comparatively low, and the typical salary for white collar work in Vancouver also doesn't support sky-high prices. The large disconnect between sale and rent prices represents the large disconnect between who is buying vs. who is actually living in these homes.
- Tsagadai 12y ago
  I thought much the same thing. While it is high it is relative to global demand areas for houses (units and apartments are in a different category for a reason). Demand is high in SF and it isn't just because of the tech industry. Some stats for Australia just to put another perspective into the mix. Median house prices for Melbourne: http://www.reiv.com.au/Property-Research/Median-Prices http://www.reiv.com.au/Property-Research/Median-Prices Median house price for Sydney: http://www.smh.com.au/business/the-economy/sydney-melbourne-house-prices-lead-strong-growth-in-january-20140203-31w0u.html http://www.smh.com.au/business/the-economy/sydney-melbourne-...
omilu 12y ago
$200,000 seems low for a place like san fran. Unless you want to take on some serious mortgage debt.
- zinssmeister 12y ago
  totally agree. It might get you a home in the East Bay but no way you could find something in SF proper.
- grundprinzip 12y ago
  It's only the necessary income to afford the mortgage. The media house price was listed as something like 600k.
- rorski 12y ago
  On top of that, good luck buying a place with a mortgage/20% down payment. A friend of mine was turned down multiple times trying to buy a condo last year because the sellers were only accepting all-cash offers.
  - dataminer 12y ago
    What difference does it make to the seller if its a all-cash?
    - ghughes 12y ago
      Less chance of the deal collapsing.
    - achllies 12y ago
      Slightly lower risk. Typically, if you are taking a loan, then you have a condition stating that the sale is contingent on the loan getting passed. If it does not, then the seller has to put the house on the market again and loses a few days and possibly value.
    - brigade 12y ago
      Zero chance the buyer and/or house will fail to qualify for a mortgage. Also gives the seller more leverage in not having to fix issues not required by law.
minimaxir 12y ago
The calculations assume you're buying a house alone. If you have two income providers, the math is slightly more sane.
- justizin 12y ago
  right, but it's essentially saying that you need at least two six-figure wage earners to enter the market.
- melling 12y ago
  Shouldn't you be able to buy a house alone? And shouldn't you be able to work part-time and pay for college? What you're missing is that you used to be able to do these things but inflation has far outpaced income in certain areas of the economy, and now it's much harder. The water is getting hot slowly and the frogs can't tell that the water is starting to boil.
  - the_watcher 12y ago
    >> Shouldn't you be able to buy a house alone? No matter where you live, it will be more difficult to buy a home with a single income than a dual income.
  - aqme28 12y ago
    I would say no. People should not buy houses alone (or arguably at all) in major metropolitan areas. edit: I agree with your point about college however.
  - eshvk 12y ago
    > Shouldn't you be able to buy a house alone? > The water is getting hot slowly and the frogs can't tell that the water is starting to boil. In one of the most expensive cities in the world? Hyperbole, apart, irrespective of how amazing the economy does, there will be places which will be expensive as shit.
    - 001sky 12y ago
      It's not the expensive as shit part, as much as it is the lack of variation. Once you get realy expensive, the place gets lame. It already happened to (much if not all of) downtown NYC and central london.
free2rhyme214 12y ago
Why buy in SF when you can rent? I don't see the point and honestly it depends on the size of the property.
- pdx6 12y ago
  Renting in SF is a strong value if you plan to live here for a while, but the property needs to be protected by rent control, otherwise you'll get wiped out during the booms and busts this city has. Owning is also a strong value over the long term, but it is more complicated between taxes, mortgages, and city ordinances; it also comes with a lot more risk and way more upfront costs. For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be.
  - htormey 12y ago
    "For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be." Solid advise. I have been living in SF for the past six years and this is what I did initially. I now live in a rent controlled aparment and I have no intention of moving. If you are going to be working in SF another viable option to consider is getting a place near a BART station in Oakland/Berkeley. Both are much cheaper places to live in than SF or the South Bay.
- yid 12y ago
  Renting in SF comes with its own set of strings and scams/opportunism, for example a lot of condos set out an attractive initial rent, but then either (a) tack on ridiculous extras like paying for water, and/or (b) raise your rent by a ridiculous amount after your first year.
  - eshvk 12y ago
    > (a) tack on ridiculous extras like paying for water Umm..If your lease says you don't pay for water, you don't. We had a lease that said we didn't pay for it. > b) raise your rent by a ridiculous amount after your first year. An overwhelming majority of the apartments in San Francisco have stringent rules on how high the rent can go up every year for a tenant who is renewing their lease. Mine was 4% or so IIRC.
puppetmaster3 12y ago
Eng. out of school w/ 0 experience are get $135K+. I don't see a problem here.
- bicknergseng 12y ago
  Whatsapp sold for $19billion surely every start up employee is a millionaire. /s
- sliverstorm 12y ago
  What about the garbage men and public educators? Or would you rather we just do away with them, along with the middle managers, telephone sanitisers and hairdressers?
  - puppetmaster3 12y ago
    How is one group succeeding hurting other groups in any way. I would argue that this helps others! Including tax revenue. As to middle managers, I'd agree.
- Thaxll 12y ago
  Not sure where those numbers came from, when I'm looking for a Google eng w/o xp it's bellow 135k care to explain?
  - puppetmaster3 12y ago
    It is anecdotal based on colleague's daughter. Sample size of 1, but I do hire mid level and its above that.
    - ateeqs 12y ago
      Would you be willing to share what the minimum/maximum is for a mid level?
    - puppetmaster3 12y ago
      Hi ateeqs. http://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm http://www.glassdoor.com/Salaries/san-francisco-software-eng... But I think $140+ is mid level in bay area + stocks, occasional work from home, etc. High level is $200k+ at top corps, anecdotal based on friends.
pdx6 12y ago
You don't need a 200k a year job to buy a house here. What you do need to do is be practical about where you are buying and have about 10% of the purchase price in your savings account. For someone in the low six figures, it is possible to buy, but it will be in the up and coming parts of town, like Ingleside, Bayview, and Visitation Valley. There is also a reverse advantage of making too little. The mayor's office of housing offers first time buyers condos below market rate. The cap is about 90k for a single person, depending on the property, and works out to about 33% of that person's pre-tax income for a mortgage payment plus HOA dues. There is a lotto to get in on this deal, and there are some steep re-sell restrictions, but for those who want to own it is a real option. For those who make even less, under 60k, the city will help out with an interest free loan up to 100k. Owning in SF is very possible for those who are willing to put in the work and deal with the red tape.
- mbesto 12y ago
  It's also worth noting - SF barely got tickled by the housing crisis.
  - grinich 12y ago
    There was already a crisis in SF: not enough housing.
    - mbesto 12y ago
      And hence why buying here is extremely smart from a financial perspective. I don't typically advise people to invest in housing for financial means (purchasing a house is largely emotional), but given the situation and the data I've seen, it appears to be a smart move.
  - aliston 12y ago
    That's not true. Anecdotally, I had several friends buy nice places in foreclosure in 2009-2010 for roughly 50% of what they were worth at the peak of the housing bubble. On average, housing prices fell by 25%, but (note above), in the lesser known neighborhoods, it was closer to 40%. http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby I think the really established neighborhoods will be insulated if there is another crash -- Nob Hill, Marina, Pac. Heights, and probably the "new" neighborhoods that have gentrified quite a bit with the tech boom -- Portrero Hill, "Dolores Heights", SOMA, Mission Bay. The parts that are just getting hot now, though, could easily become less desirable and get more than a "tickle" just as they did in '08.
mbillie1 12y ago
I feel bad for the people who grew up in the area and feel connected because of family or whatnot. As a software engineer NOT from SF, it's probably the last place in the country I'd move to - we have such a relative abundance of remote opportunities compared to other professions. I don't really see why I'd be willing to pay maybe up to 4x+ my housing cost for perhaps a 15% increase in pay. It's a nice place and all, but geez.
- downandout 12y ago
  >I feel bad for the people who grew up in the area The people who grew up there (whose parents owned homes) are doing quite well (at least their parents are) because of the vast appreciation of their homes. Among some of my wealthy friends that have paid ridiculous prices for real estate in SF, I have heard the rather condescending term "thousand dollar millionaires" used to refer to these long-term homeowners that did nothing to create a $1M+ net worth other than pay their mortgage and live in the same place for decades. Anyway, it's not the people who grew up there that you should feel bad for. It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.
  - mbillie1 12y ago
    > It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general. This is more along the lines of what I meant, although I'd wager plenty of people grew up renting and have been slowly pushed out of what feels like their home by skyrocketing housing prices as well.
  - sliverstorm 12y ago
    The people who grew up there don't have any extra wealth. So long as their parents continue to live in the same house, it's all just wealth "on paper". Now, if they live with their parents, that is certainly a leg up in terms of not paying rent (or paying much less rent), but other than that...
  - 12y ago
aresant 12y ago
Not to mention the likely minimum 20% down payment of ~135,000 (20% of the median 679,800).
- duderific 12y ago
  Yep. Almost everyone I know who has bought in the Bay Area (including myself) has gotten help from relatives to come up with the down payment. Nowadays, you pretty much need all cash to have a chance at a decent place; money is flowing in from China and investment firms like Blackrock, who are buying up all the properties they can get and turning them into rentals.
  - phamilton 12y ago
    I'd also say that 20% down on a first home is also rare. Interest rates are low enough that PMI isn't a deal breaker, and salaries are high enough to make it easy to qualify with 10%.
- aetherson 12y ago
  By definition, half of all homes cost less than the median. Where do you get from there to a "minimum" down payment of $135k?
  - broolstoryco 12y ago
    > By definition, half of all homes cost less than the median. That's not what median means
    - qntmfred 12y ago
      I think mean means what you think median means. Known what I mean?
martingordon 12y ago
This doesn't take into account median salaries. It's possible that the median salary in SF is $200k and everything is OK (it isn't $200k though). While it doesn't really affect the results of this article, it's important to always consider that like-for-like comparisons are being made. Like I said, the numbers don't change much but if you're curious, here are the results: San Francisco-Oakland-Fremont metro area 8.84 San Diego-Carlsbad-San Marcos metro area 7.52 Los Angeles metro area 6.98 New York metro area 5.87 Miami (FL) metro area 5.25 Seattle-Tacoma metro area 5.11 Boston metro area 5.10 Riverside-San Bernardino-Ontario metro area 4.71 Washington (DC) metro area 4.10 Phoenix-Mesa-Glendale metro area 3.57 Baltimore metro area 3.52 Philadelphia metro area 3.46 Houston metro area 3.17 Tampa-St. Petersburg-Clearwater metro area 3.06 Chicago metro area 3.05 Dallas-Fort Worth metro area 2.99 Minneapolis-St. Paul metro area 2.95 Atlanta metro area 2.48 St. Louis metro area 2.41 Detroit metro area 1.29
- shasta 12y ago
  Cool numbers. Are they median home value / median income?
  - martingordon 12y ago
    Yep
- daveslash 12y ago
  Interesting numbers (I live in San Diego-Carlsbad-San Marco metro). I make 3x+ the median income of my hometown in Maine, but here I only rent a single bedroom in a larger house. I'd love to own....but I've known for a while that my options are either move or make more. Would you happen to have a source for the numbers? Thanks!
  - martingordon 12y ago
tomkarlo 12y ago
This says more about the arbitrary nature of using city boundaries for studying home pricing than anything else. San Francisco certainly has high prices, but it also has one of the smallest footprints of any major city, and has lots of nearly-indistinguishable residential areas that are adjacent but fall outside its boundaries, particularly to the South and East. If you look just at pricing within the city boundary, it's going to be inflated by the fact that such a large percentage of that area is still relatively close to the "city center" and benefitting from the value that creates. Meanwhile, "New York City" (which ranked lower on median price) includes large residential expanses that are much further away from the city center, including Staten Island. (Not to mention Los Angeles, which is what, 50X the size of SF proper?) I'd like to see this comparison done for say, Manhattan island vs. San Francisco - that would be a much more apples-to-apples compare.
- defilade 12y ago
  That's absolutely right, and in the few articles I've seen that break out Manhattan, it's still significantly more expensive than SF. Of course, that's old news, right? And being old news, "Manhattan is the most expensive place to live" doesn't fit into the current tech boom, linkbait narrative that all the blogs and news outlets are exploting.
- rscale 12y ago
  The study did not use city boundaries, it used MSA boundaries, which include the outlying areas. Here's a map of the area in question: http://en.wikipedia.org/wiki/File:San_Jose-San_Francisco-Oakland_CSA_2010_Census.png http://en.wikipedia.org/wiki/File:San_Jose-San_Francisco-Oak...
- bane 12y ago
  One of the interesting bits then is the differences between the common meaning of a city and the statutory boundaries. What people mean when they say "New York City" and what it actually is are more or less the same thing (though most people are surprised at how big and diverse the 5 boroughs actually are). People don't really count the NYC Metro area in the equation. Nobody who visit Trenton or New Haven comes back home and says "I went to New York". When people say lots of other cities, they really mean the metro area. "Washington D.C." refers colloquially to the 7th largest urban area in the country. People can make regular repeated visits to Arlington, or Fairfax or wherever and still go back home and say "I just went to D.C.". I suspect SF is the same. People can visit anywhere in the Bay Area and go back home and credibly say "I visited San Francisco" even if they never actually stepped foot in the city proper. edit I notice everybody who disagrees with this premise lives or is from the Bay Area where these things matter. On the other side of the country, all of California north of Monterrey is basically "San Francisco", most people think Oakland is part of L.A. and nobody could pick out SV on a map if their life depended on it.
cantbuyahouse 12y ago
Not SF, but my wife and I are trying to buy a house in Silicon Valley. I can't imagine how this market is sustainable, but all the evidence is that there is no hope for improvement. It's disheartening to say the least. My wife and I are ~30 years old, have $500k in cash saved, and our combined salary is ~230k. So we are in the upper upper range of earners, and not looking for sympathy. But even with that, we are unable to buy a house or townhouse in mid-range neighborhoods here. The houses all go for 1.3-1.5 M. I don't see that ever being feasible for us. I don't know that I have a point, other than an anecdote of what this looks like on the ground. I know we could commute or move to a lesser area, but how are there enough people to maintain the volume of ongoing purchases of all these $1.5M houses?
- ashayh 12y ago
  Look in Fremont. Mediocre suburbia and no downtown, but decent houses and schools
- poulson 12y ago
  Was there a typo in your message? Why would you be unable to afford a home that you could immediately put down a 33% down payment in cash for?
  - cantbuyahouse 12y ago
    That would work out to $6600 a month for mortgage, insurance, and property tax. Or over half of our take home pay.
- ateeqs 12y ago
  Recently, news was indicating that people were considering homes as an investment again. This is likely what is fueling these prices. I guess, I would say, you should use your "gut-feelings." If something doesn't feel right, something probably isn't right.
- TheCoelacanth 12y ago
  It seems like you are just being too picky. You could easily afford a median house or even a house that is well above the median.
buckbova 12y ago
Live in Hayward by the train. Problem solved.
ThibaultB 12y ago
I see a lot of posts about 'incredible' prices in SF and The Bay. But I'm living in Paris and a medium apartment (1400-1600sq ft) here is around €800-1M (±$1-1.3m). And we have 45% taxes ...
jgamman 12y ago
seems downright cheap to me here in Auckland NZ

115 points by anishkothari 12y ago

marc0 12y ago

... and I did think SF is expensive ... average semidetached house with small garden in a suburb of Munich, Germany (1h commuting): 950k USD, quite an average price here. And the salaries are lower than in SF while cost of living is higher. 770k USD in SF looks like a bargain :-)

biot 12y ago

Still cheaper than Vancouver with a $922K benchmark house price[0] ($847K USD) in Greater Vancouver area, or $2.1M in Vancouver West. Factor in Vancouver's lower salaries and higher mortgage costs, and SF looks particularly cheap in comparison! [0] http://www.theglobeandmail.com/report-on-business/vancouver-housing-sales-rise-378-per-cent-in-october-from-a-year-ago/article15243231/ http://www.theglobeandmail.com/report-on-business/vancouver-...

msie 12y ago
Nobody seems to consider South East Van part of Vancouver or Burnaby, which is close by. Some houses in those places go for less than $600K. I've seen some townhouses go for $460K. http://www.zoocasa.com/en/vancouver-bc-real-estate/2601981-3387-flagstaff-place-vancouver-bc-v5s4k9-v1054432 http://www.zoocasa.com/en/vancouver-bc-real-estate/2601981-3...
jmj4 12y ago
Rent seems to be at least 50% higher in SF though[1]. How is that? [1] http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=Canada&country2=United+States&city1=Vancouver&city2=San+Francisco%2C+CA http://www.numbeo.com/cost-of-living/compare_cities.jsp?coun...
- eigenvector 12y ago
  Both rent and home prices are driven by supply and demand, that is, what the market can bear. In both cases supply is the same, but for ownership, the market is global. You can live on the moon and own property in Vancouver. The price of Vancouver property is constrained only by the limits of how much foreign capital is available to be safely parked in Canadian real estate, not by the population of Vancouver. As you can imagine there is considered more of the former than the latter. However, the market for rentals is constrained by the number and salaries of people who actually live in Vancouver. Nobody rents an apartment in a city in which they don't actually reside. You can't charge $3,000/month for an apartment in Vancouver because no one will be able to afford it. In Vancouver a junior engineer earns $60,000/year. Vancouver salaries aren't higher than anywhere else in Canada (in fact they're lower than Calgary and Toronto, both of which have cheaper housing, and about on par with Montreal which has MUCH cheaper housing), so despite the crazy property market this keeps rents down. SF's crazy rents are driven by the tech industry salaries that are much higher than anywhere else in the country (or in the world for that matter).
- potatolicious 12y ago
  SF prices are driven by intense demand due to the tech industry. Tech continues to import more and more people but there isn't enough room for everyone. Vancouver prices are driven by speculation, primarily from international investors. The actual demand for housing in the city is comparatively low, and the typical salary for white collar work in Vancouver also doesn't support sky-high prices. The large disconnect between sale and rent prices represents the large disconnect between who is buying vs. who is actually living in these homes.
Tsagadai 12y ago
I thought much the same thing. While it is high it is relative to global demand areas for houses (units and apartments are in a different category for a reason). Demand is high in SF and it isn't just because of the tech industry. Some stats for Australia just to put another perspective into the mix. Median house prices for Melbourne: http://www.reiv.com.au/Property-Research/Median-Prices http://www.reiv.com.au/Property-Research/Median-Prices Median house price for Sydney: http://www.smh.com.au/business/the-economy/sydney-melbourne-house-prices-lead-strong-growth-in-january-20140203-31w0u.html http://www.smh.com.au/business/the-economy/sydney-melbourne-...

omilu 12y ago

$200,000 seems low for a place like san fran. Unless you want to take on some serious mortgage debt.

zinssmeister 12y ago
totally agree. It might get you a home in the East Bay but no way you could find something in SF proper.
grundprinzip 12y ago
It's only the necessary income to afford the mortgage. The media house price was listed as something like 600k.
rorski 12y ago
On top of that, good luck buying a place with a mortgage/20% down payment. A friend of mine was turned down multiple times trying to buy a condo last year because the sellers were only accepting all-cash offers.
- dataminer 12y ago
  What difference does it make to the seller if its a all-cash?
  - ghughes 12y ago
    Less chance of the deal collapsing.
  - achllies 12y ago
    Slightly lower risk. Typically, if you are taking a loan, then you have a condition stating that the sale is contingent on the loan getting passed. If it does not, then the seller has to put the house on the market again and loses a few days and possibly value.
  - brigade 12y ago
    Zero chance the buyer and/or house will fail to qualify for a mortgage. Also gives the seller more leverage in not having to fix issues not required by law.

minimaxir 12y ago

The calculations assume you're buying a house alone. If you have two income providers, the math is slightly more sane.

justizin 12y ago
right, but it's essentially saying that you need at least two six-figure wage earners to enter the market.
melling 12y ago
Shouldn't you be able to buy a house alone? And shouldn't you be able to work part-time and pay for college? What you're missing is that you used to be able to do these things but inflation has far outpaced income in certain areas of the economy, and now it's much harder. The water is getting hot slowly and the frogs can't tell that the water is starting to boil.
- the_watcher 12y ago
  >> Shouldn't you be able to buy a house alone? No matter where you live, it will be more difficult to buy a home with a single income than a dual income.
- aqme28 12y ago
  I would say no. People should not buy houses alone (or arguably at all) in major metropolitan areas. edit: I agree with your point about college however.
- eshvk 12y ago
  > Shouldn't you be able to buy a house alone? > The water is getting hot slowly and the frogs can't tell that the water is starting to boil. In one of the most expensive cities in the world? Hyperbole, apart, irrespective of how amazing the economy does, there will be places which will be expensive as shit.
  - 001sky 12y ago
    It's not the expensive as shit part, as much as it is the lack of variation. Once you get realy expensive, the place gets lame. It already happened to (much if not all of) downtown NYC and central london.

free2rhyme214 12y ago

Why buy in SF when you can rent? I don't see the point and honestly it depends on the size of the property.

pdx6 12y ago
Renting in SF is a strong value if you plan to live here for a while, but the property needs to be protected by rent control, otherwise you'll get wiped out during the booms and busts this city has. Owning is also a strong value over the long term, but it is more complicated between taxes, mortgages, and city ordinances; it also comes with a lot more risk and way more upfront costs. For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be.
- htormey 12y ago
  "For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be." Solid advise. I have been living in SF for the past six years and this is what I did initially. I now live in a rent controlled aparment and I have no intention of moving. If you are going to be working in SF another viable option to consider is getting a place near a BART station in Oakland/Berkeley. Both are much cheaper places to live in than SF or the South Bay.
yid 12y ago
Renting in SF comes with its own set of strings and scams/opportunism, for example a lot of condos set out an attractive initial rent, but then either (a) tack on ridiculous extras like paying for water, and/or (b) raise your rent by a ridiculous amount after your first year.
- eshvk 12y ago
  > (a) tack on ridiculous extras like paying for water Umm..If your lease says you don't pay for water, you don't. We had a lease that said we didn't pay for it. > b) raise your rent by a ridiculous amount after your first year. An overwhelming majority of the apartments in San Francisco have stringent rules on how high the rent can go up every year for a tenant who is renewing their lease. Mine was 4% or so IIRC.

puppetmaster3 12y ago

Eng. out of school w/ 0 experience are get $135K+. I don't see a problem here.

bicknergseng 12y ago
Whatsapp sold for $19billion surely every start up employee is a millionaire. /s
sliverstorm 12y ago
What about the garbage men and public educators? Or would you rather we just do away with them, along with the middle managers, telephone sanitisers and hairdressers?
- puppetmaster3 12y ago
  How is one group succeeding hurting other groups in any way. I would argue that this helps others! Including tax revenue. As to middle managers, I'd agree.
Thaxll 12y ago
Not sure where those numbers came from, when I'm looking for a Google eng w/o xp it's bellow 135k care to explain?
- puppetmaster3 12y ago
  It is anecdotal based on colleague's daughter. Sample size of 1, but I do hire mid level and its above that.
  - ateeqs 12y ago
    Would you be willing to share what the minimum/maximum is for a mid level?
  - puppetmaster3 12y ago
    Hi ateeqs. http://www.glassdoor.com/Salaries/san-francisco-software-engineer-salary-SRCH_IL.0,13_IM759_KO14,31.htm http://www.glassdoor.com/Salaries/san-francisco-software-eng... But I think $140+ is mid level in bay area + stocks, occasional work from home, etc. High level is $200k+ at top corps, anecdotal based on friends.

pdx6 12y ago

You don't need a 200k a year job to buy a house here. What you do need to do is be practical about where you are buying and have about 10% of the purchase price in your savings account. For someone in the low six figures, it is possible to buy, but it will be in the up and coming parts of town, like Ingleside, Bayview, and Visitation Valley. There is also a reverse advantage of making too little. The mayor's office of housing offers first time buyers condos below market rate. The cap is about 90k for a single person, depending on the property, and works out to about 33% of that person's pre-tax income for a mortgage payment plus HOA dues. There is a lotto to get in on this deal, and there are some steep re-sell restrictions, but for those who want to own it is a real option. For those who make even less, under 60k, the city will help out with an interest free loan up to 100k. Owning in SF is very possible for those who are willing to put in the work and deal with the red tape.

mbesto 12y ago
It's also worth noting - SF barely got tickled by the housing crisis.
- grinich 12y ago
  There was already a crisis in SF: not enough housing.
  - mbesto 12y ago
    And hence why buying here is extremely smart from a financial perspective. I don't typically advise people to invest in housing for financial means (purchasing a house is largely emotional), but given the situation and the data I've seen, it appears to be a smart move.
- aliston 12y ago
  That's not true. Anecdotally, I had several friends buy nice places in foreclosure in 2009-2010 for roughly 50% of what they were worth at the peak of the housing bubble. On average, housing prices fell by 25%, but (note above), in the lesser known neighborhoods, it was closer to 40%. http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby http://www.paragon-re.com/3_Recessions_2_Bubbles_and_a_Baby I think the really established neighborhoods will be insulated if there is another crash -- Nob Hill, Marina, Pac. Heights, and probably the "new" neighborhoods that have gentrified quite a bit with the tech boom -- Portrero Hill, "Dolores Heights", SOMA, Mission Bay. The parts that are just getting hot now, though, could easily become less desirable and get more than a "tickle" just as they did in '08.

mbillie1 12y ago

I feel bad for the people who grew up in the area and feel connected because of family or whatnot. As a software engineer NOT from SF, it's probably the last place in the country I'd move to - we have such a relative abundance of remote opportunities compared to other professions. I don't really see why I'd be willing to pay maybe up to 4x+ my housing cost for perhaps a 15% increase in pay. It's a nice place and all, but geez.

downandout 12y ago
>I feel bad for the people who grew up in the area The people who grew up there (whose parents owned homes) are doing quite well (at least their parents are) because of the vast appreciation of their homes. Among some of my wealthy friends that have paid ridiculous prices for real estate in SF, I have heard the rather condescending term "thousand dollar millionaires" used to refer to these long-term homeowners that did nothing to create a $1M+ net worth other than pay their mortgage and live in the same place for decades. Anyway, it's not the people who grew up there that you should feel bad for. It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general.
- mbillie1 12y ago
  > It's the people that need to be there for one reason or another and can't afford a living wage with the incredibly inflated prices and taxes associated with living in SF and California in general. This is more along the lines of what I meant, although I'd wager plenty of people grew up renting and have been slowly pushed out of what feels like their home by skyrocketing housing prices as well.
- sliverstorm 12y ago
  The people who grew up there don't have any extra wealth. So long as their parents continue to live in the same house, it's all just wealth "on paper". Now, if they live with their parents, that is certainly a leg up in terms of not paying rent (or paying much less rent), but other than that...
- 12y ago

aresant 12y ago

Not to mention the likely minimum 20% down payment of ~135,000 (20% of the median 679,800).

duderific 12y ago
Yep. Almost everyone I know who has bought in the Bay Area (including myself) has gotten help from relatives to come up with the down payment. Nowadays, you pretty much need all cash to have a chance at a decent place; money is flowing in from China and investment firms like Blackrock, who are buying up all the properties they can get and turning them into rentals.
- phamilton 12y ago
  I'd also say that 20% down on a first home is also rare. Interest rates are low enough that PMI isn't a deal breaker, and salaries are high enough to make it easy to qualify with 10%.
aetherson 12y ago
By definition, half of all homes cost less than the median. Where do you get from there to a "minimum" down payment of $135k?
- broolstoryco 12y ago
  > By definition, half of all homes cost less than the median. That's not what median means
  - qntmfred 12y ago
    I think mean means what you think median means. Known what I mean?

martingordon 12y ago

This doesn't take into account median salaries. It's possible that the median salary in SF is $200k and everything is OK (it isn't $200k though). While it doesn't really affect the results of this article, it's important to always consider that like-for-like comparisons are being made. Like I said, the numbers don't change much but if you're curious, here are the results: San Francisco-Oakland-Fremont metro area 8.84 San Diego-Carlsbad-San Marcos metro area 7.52 Los Angeles metro area 6.98 New York metro area 5.87 Miami (FL) metro area 5.25 Seattle-Tacoma metro area 5.11 Boston metro area 5.10 Riverside-San Bernardino-Ontario metro area 4.71 Washington (DC) metro area 4.10 Phoenix-Mesa-Glendale metro area 3.57 Baltimore metro area 3.52 Philadelphia metro area 3.46 Houston metro area 3.17 Tampa-St. Petersburg-Clearwater metro area 3.06 Chicago metro area 3.05 Dallas-Fort Worth metro area 2.99 Minneapolis-St. Paul metro area 2.95 Atlanta metro area 2.48 St. Louis metro area 2.41 Detroit metro area 1.29

shasta 12y ago
Cool numbers. Are they median home value / median income?
- martingordon 12y ago
  Yep
daveslash 12y ago
Interesting numbers (I live in San Diego-Carlsbad-San Marco metro). I make 3x+ the median income of my hometown in Maine, but here I only rent a single bedroom in a larger house. I'd love to own....but I've known for a while that my options are either move or make more. Would you happen to have a source for the numbers? Thanks!
- martingordon 12y ago

tomkarlo 12y ago

This says more about the arbitrary nature of using city boundaries for studying home pricing than anything else. San Francisco certainly has high prices, but it also has one of the smallest footprints of any major city, and has lots of nearly-indistinguishable residential areas that are adjacent but fall outside its boundaries, particularly to the South and East. If you look just at pricing within the city boundary, it's going to be inflated by the fact that such a large percentage of that area is still relatively close to the "city center" and benefitting from the value that creates. Meanwhile, "New York City" (which ranked lower on median price) includes large residential expanses that are much further away from the city center, including Staten Island. (Not to mention Los Angeles, which is what, 50X the size of SF proper?) I'd like to see this comparison done for say, Manhattan island vs. San Francisco - that would be a much more apples-to-apples compare.

defilade 12y ago
That's absolutely right, and in the few articles I've seen that break out Manhattan, it's still significantly more expensive than SF. Of course, that's old news, right? And being old news, "Manhattan is the most expensive place to live" doesn't fit into the current tech boom, linkbait narrative that all the blogs and news outlets are exploting.
rscale 12y ago
The study did not use city boundaries, it used MSA boundaries, which include the outlying areas. Here's a map of the area in question: http://en.wikipedia.org/wiki/File:San_Jose-San_Francisco-Oakland_CSA_2010_Census.png http://en.wikipedia.org/wiki/File:San_Jose-San_Francisco-Oak...
bane 12y ago
One of the interesting bits then is the differences between the common meaning of a city and the statutory boundaries. What people mean when they say "New York City" and what it actually is are more or less the same thing (though most people are surprised at how big and diverse the 5 boroughs actually are). People don't really count the NYC Metro area in the equation. Nobody who visit Trenton or New Haven comes back home and says "I went to New York". When people say lots of other cities, they really mean the metro area. "Washington D.C." refers colloquially to the 7th largest urban area in the country. People can make regular repeated visits to Arlington, or Fairfax or wherever and still go back home and say "I just went to D.C.". I suspect SF is the same. People can visit anywhere in the Bay Area and go back home and credibly say "I visited San Francisco" even if they never actually stepped foot in the city proper. edit I notice everybody who disagrees with this premise lives or is from the Bay Area where these things matter. On the other side of the country, all of California north of Monterrey is basically "San Francisco", most people think Oakland is part of L.A. and nobody could pick out SV on a map if their life depended on it.

cantbuyahouse 12y ago

Not SF, but my wife and I are trying to buy a house in Silicon Valley. I can't imagine how this market is sustainable, but all the evidence is that there is no hope for improvement. It's disheartening to say the least. My wife and I are ~30 years old, have $500k in cash saved, and our combined salary is ~230k. So we are in the upper upper range of earners, and not looking for sympathy. But even with that, we are unable to buy a house or townhouse in mid-range neighborhoods here. The houses all go for 1.3-1.5 M. I don't see that ever being feasible for us. I don't know that I have a point, other than an anecdote of what this looks like on the ground. I know we could commute or move to a lesser area, but how are there enough people to maintain the volume of ongoing purchases of all these $1.5M houses?

ashayh 12y ago
Look in Fremont. Mediocre suburbia and no downtown, but decent houses and schools
poulson 12y ago
Was there a typo in your message? Why would you be unable to afford a home that you could immediately put down a 33% down payment in cash for?
- cantbuyahouse 12y ago
  That would work out to $6600 a month for mortgage, insurance, and property tax. Or over half of our take home pay.
ateeqs 12y ago
Recently, news was indicating that people were considering homes as an investment again. This is likely what is fueling these prices. I guess, I would say, you should use your "gut-feelings." If something doesn't feel right, something probably isn't right.
TheCoelacanth 12y ago
It seems like you are just being too picky. You could easily afford a median house or even a house that is well above the median.

buckbova 12y ago

Live in Hayward by the train. Problem solved.

ThibaultB 12y ago

I see a lot of posts about 'incredible' prices in SF and The Bay. But I'm living in Paris and a medium apartment (1400-1600sq ft) here is around €800-1M (±$1-1.3m). And we have 45% taxes ...

jgamman 12y ago

seems downright cheap to me here in Auckland NZ