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Most people won’t believe it: According to the National Association of Realtors (NAR), buying a home in San Francisco and the greater Bay Area in the past year has become a more affordable affair.
In fact, the SF metro finished in the top five in a ranking of cities that improved their affordability rating in the past three months.
However—and pretty much nobody will have trouble believing this part—even with that year-over-year improvement, San Francisco still has some of the least attainable housing stock in the nation.
NAR released its regular Quarterly Affordability Report Monday, ranking major U.S. cities and surrounding areas on a scale between zero and two, with zero being least affordable and two being the most affordable.
Generally, a score of one is usually close to average, but it varies. In September of 2019, the nationwide average score was 0.84; California, with the least affordable homes nationwide, had a score of 0.57.
In all, 81 cities saw their scores improve in the new report. Of those cities with the largest positive change in affordability year over year, the “SF-Oakland et al” region came in fifth, rising from 0.47 last year to 0.59 in 2019.
While that’s impressive relative to 2018, it still means that the average SF resident can only afford about 18 percent of SF housing stock, and it’s the eighth worst score nationwide. For the record, San Jose’s 0.53 percent showing was the fourth worst in the US.
What accounts for the change year over year? For starters, statistics based on medians are always a little wobbly. The shorter the terms, the more they’ll bounce up and down, so one good year is not necessarily that remarkable in the grand scheme.
But note also that affordability is a measure not just of home prices but also of income—i.e., how much an average household spends without becoming “housing burdened” by the cost of a mortgage each month.
So when the Bay Area’s median income grows faster than its housing costs, affordability rises (even while remaining dismal). The fact that the San Francisco score reflects an area much larger than just the city makes a difference too.
The California Association of Realtors estimates that in October, the median sales price of a single-family home in SF went up 3.1 percent year over year, but across all nine counties it dropped two percent.