Californians who want to buy a home in four of the state’s largest cities need to make $200,000 or more a year, according to the national real estate company Zillow.
Those cities are San Jose, San Francisco, Los Angeles, and San Diego, Zillow reported Feb. 29.
In the tech capital of San Jose, households must make about $455,000 per year to afford a typical home; in San Francisco, about $340,000 a year; Los Angeles, around $279,000; and in San Diego, about $274,000, according to Zillow.
Wages also haven’t kept pace, Zillow reported, with the rapid rise of home and mortgage costs.
Median incomes for the cities, according to the U.S. Census latest numbers from 2022 were: San Jose, $136,000; San Francisco, nearly $137,000; Los Angeles, $76,000; and San Diego, $99,000.
The income needed to afford a home on average in the U.S. is up 80 percent since 2020, while the median income has only risen 23 percent during that time, according to the report. The roughly $106,500 needed to buy an average home in the country is well above what a typical household earns, about $81,000, according to Zillow.
With the cost of a mortgage rising, about 21 percent of last year’s homebuyers reported buying a property with a friend or relative to help with affordability, according to the real estate company.
The monthly mortgage payment on a typical home has nearly doubled nationally since January 2020, up more than 96 percent to $2,188, Zillow reported.
Home values have also increased more than 42 percent during the same time, with the typical U.S. home now worth about $343,000.
Mortgage rates, in January 2022, were about 3.5 percent, making homes affordable for most households, according to the study. However, the average 30-year fixed mortgage rate is currently nearly 6.7 percent.
For a household making a median income, it would take almost 8 ½ years before being able to put 10 percent down on a typical mortgage in the U.S., about a year longer than it would have in 2020, Zillow said.
“It’s no wonder, then, that half of first-time buyers say at least part of their down payment came from a gift or loan from family or friends,” Zillow Economic Analyst Anushna Prakash said Thursday in a press release.
Seattle, New York City, and Boston completed the list of the top seven least affordable real estate markets, and the only major U.S. cities where a typical home is affordable to a household making the median income are Pittsburgh, St. Louis, and Detroit, according to Zillow’s analysis.
Zillow used household income data from the American Community Survey and Moody’s Analytics through 2022 for the study. Current estimates were taken from the Employment Cost Index provided by the Bureau of Labor Statistics, according to Zillow.
