Shortly after officials revealed that San Francisco had become the first US city to mandate a $15 minimum wage in accordance with a law passed in 2014 – and just in the nick of time, too. Because home prices in San Francisco have risen so rapidly that Business Insider reported Saturday that applicants for affordable hoping qualify for affordable housing in the city must earn less than 117,400 a year qualify for low-income housing in San Francisco and a few neighboring counties, according to a new report from the Department of Housing and Urban Development. To help put this in context, that number is just shy of the city’s median income of $118,400.
Here’s more from BI:
To qualify for low-income housing in San Francisco County or the nearby San Mateo and Marin counties, a four-person household can make as much as $117,400 a year. The same goes for a one-person household raking in $82,200 a year.
That’s the conclusion of a new report from the Department of Housing and Urban Development, which just released the 2018 thresholds for affordable housing across the US…the San Francisco metro area’s threshold is just below the area’s median family income of $118,400.
Housing costs in San Francisco have been increasing at a ludicrous rate: According to the S&P/Case-Shiller Home price index, which covers not just the city and county, but also includes four other Bay Area counties: Alameda, Contra Costa, Marin, and San Mateo, prices in the region increased by a YOY 10% as of April. However, others argue that the increase in home prices has been even more extreme For example, Paragon Real Estate Group reported in April that prices in San Francisco had skyrocketed by an astounding 24% YOY, more than double the Case-Shiller estimate. This staggering jump has left the median home price in the city at an astonishing $1.6 million.
Of course, the new figures from the city’s Department of Housing are hardly surprising: As BI reports, over the past several years, the Bay Area has been grappling with an affordable-housing crisis that has been exacerbated by the tech boom and a concomittant shortage of housing stock. Several Bay Area tech giants (like Alphabet, for example) situated their headquarters in areas without much nearby housing.
And as we pointed out back in April, this is what a housing boom looks like…
…which in turn pushed the median home sales price above $1.6 million…
…which is well above the national average.
Even the city’s “poor” neighborhoods have seen a huge boost in prices on a neighborhood-by-neighborhood basis. In the table below, the median house prices range from $960,000 in Bayview, one of the more troubled neighborhoods, to over $5 million in Pacific Heights, one of the city’s wealthiest neighborhoods.
Unfortunately for the city’s beleaguered residents, SF’s “robust” affordable housing lottery isn’t nearly enough to serve anywhere close to the numbers who could use the help. With this in mind, some Bay Area cities are considering alternatives, like a sizable “head tax” on employers. In Cupertino and Mountain View, the city councils have proposed a $150-a-year per-employee “head tax” that would replenish a fund dedicated to building more affordable housing.
SF is also considering a head tax. And while tech companies (like Amazon in Seattle) have threatened to move or abandon planned expansions over similar measures, at this rate, the city’s residents would also benefit from this outcome: Because pushing out the tech talent that have been probably the largest contributors to the housing-price boom, the city might slowly but surely send prices lower… along with tax revenues and all local economic growth.