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San Francisco’s Incredibly High Costs to Build

We all know that high demand and a shortage of housing units both drive up the costs to live in San Francisco.  Yet one thing that isn’t discussed as often is San Francisco’s part in these high costs.  The following article from the San Francisco Chronicle does a great job of showing how an abundance of City fees and an exhaustive permit process are two of the largest barriers for developers to build in the city, delaying multiple projects that have been in the works for years.

More information at the SF Chronicle here.

Do You Make Enough to Buy?

My last post showed us median home prices in the Bay Area.  Now let’s look at income.  The chart below compares median income by county. The difference in income among the top three (Marin, Santa Clara and San Mateo) is negligible. SF’s is a notch lower, perhaps because we have a larger number of recent graduates who are seeking to launch their lives in the “Big Bad City.” Rent control has also enabled many with lower incomes to stick around. 

Median Household Income

Minimum Income Requirements

It’s the comparison between this chart and the one just above that shows just how out of reach Bay Area housing is for most of the people who live here. The silver lining is that a slight drop in prices, along with a significant drop in interest rates has increased affordability for some.

We should also keep in mind that this is affordability for a median priced house. Half of our house sales are below that number.

Monthly Housing Costs

This is where the story gets interesting, at least to me. $8,400 may seem like a lot to pay per month to own in San Francisco, but this is pre-tax. About $1500/month of your payment is going to get refunded to you each April, so your net payment is actually $7,000/month. The other cheerful news here is that the payment has actually gone down by over $1,000 since last year, mostly due to lower interest rates.