In San Mateo County, homebuyers need to make an annual income of $511,000 to afford a median-priced home — the highest in the state, according to data released Thursday by the California Association of Realtors.
That eye-popping figure is being driven primarily by persistently high interest rates, which show little sign of abating — at least through the summer, said Oscar Wei, the association’s deputy chief economist, who tracked home buying affordability figures for almost every county in the state.
“I understand in the Bay Area, income levels tend to be a little bit higher compared to other parts of the country,” he said. “But $500,000 or over $500,000 — that’s still a huge number.”
Wei said the lack of affordability is due, in part, to high borrowing costs, which have more than doubled over the past few years, along with already-high home prices, a shortage of supply, and incomes that haven’t grown in tandem with rising costs.
“With interest rates rising that fast — and also, home prices not dropping much — that’s caused housing affordability to come down,” he said.
Three other Bay Area counties — Santa Clara, Marin and San Francisco — fell just behind San Mateo County in terms of the annual income needed for a median-priced home.
The estimates are based on the median price for a detached, single-family home for the first quarter of 2024 and assume a 30-year mortgage, a 20% down payment and a 6.86% interest rate, along with projected taxes and insurance costs.
Across California, only 17% of earners could afford to purchase a median-priced home in their county, according to the realtors association. That’s a steep drop from 2012, when 56% of earners could afford their county’s median-priced home, and a far cry from the current national average of 37%.