Looking for a home in Silicon Valley? Better make $255,000

Just how big does your paycheck need to be to buy a home in Silicon Valley?

Try almost $255,000 a year. That’s the salary needed to afford a median-priced home in the San Jose metro area — making it the most expensive region in the country, according to a new report by mortgage data provider HSH.com. The San Francisco area came in second.

But a typical family in Santa Clara County makes less than half of that six-figure salary, according to Census data.

The resulting gap — between the money needed to buy a home and the money actually in local residents’ bank accounts — highlights the stark unaffordability of the Bay Area’s housing market, and explains why many residents are giving up and looking elsewhere.

“On one family income, even with both parents working, they can’t afford to purchase a home unless they’re getting support from their parents or their siblings,” said Andrea Urton, CEO of Santa Clara County homeless services nonprofit HomeFirst.

In the San Jose metro area, which includes Santa Clara and San Benito counties, buyers would need to make $254,836 to buy a house, according to HSH. That’s based on a median home price of $1.25 million, and monthly payments of $5,946 for a 30-year fixed-rate mortgage. HSH analysts also took estimated taxes and insurance costs into their calculations, and assumed buyers would have a 20 percent down payment.

But the median household income in Santa Clara County was $106,761 in 2017, according to the latest Census data available. In San Benito County, it was $80,760.

As a result, Urton is having trouble holding onto employees, complicating her task of helping the region’s most vulnerable residents.

“We lose a lot of people to other areas in the United States,” Urton said, “and retention is difficult. We lose a lot of employees to local government who can pay pensions and higher wages.”

Urton said she spoke to an employee over the weekend who is thinking about moving to Texas, so he and his school-teacher wife can afford to buy a home.

San Francisco ranked second on the HSH list of most expensive regions. In the San Francisco metro area, which includes San Francisco, San Mateo, Alameda, Contra Costa and Marin counties, a buyer would need to make $198,978 a year to afford a median-priced home. That’s based on a median home price of $925,200 and monthly mortgage payments of $4,643.

In Alameda County, the median household income was $85,743 in 2017, according to Census data.

That gap can hurt the Bay Area’s poorest residents, as well. High home prices and a competitive market freeze out middle and high-income families who would otherwise buy a house, Urton said. Instead they rent, helping to drive up rental prices. In the end, there’s nothing left for the region’s low-income residents. And when an unexpected personal, financial or medical crisis leaves someone homeless, it’s nearly impossible for them to get back into the rental market, even if they have a job, Urton said.

“We have a group of people who are first-time homeless, and in the past they would be able to re-house themselves relatively quickly,” Urton said. “Now they’re not able to because of the sheer fact that they can’t afford it.”

For those who are fed up with the Bay Area’s housing market and looking to relocate, Pittsburgh might be a good option. In the Pittsburgh metro area, buyers need to make $37,660 a year to afford a median-priced home — making it the most affordable region in the country, according to HSH. That’s based on a median home price of $141,625. Cleveland and Oklahoma City were close runners-up.

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Go into debt to pay rent? California startup finances your rent with high-interest loans In both the San Jose and San Francisco areas, the salary needed to buy a home has remained relatively steady for the past year — increasing about 0.1 percent. Real estate experts have speculated that the market is starting to cool slightly in the Bay Area. But prices have a long way to fall before they will be affordable for many residents.

“Potential homebuyers continue to face challenging conditions,” HSH.com vice president Keith Gumbinger wrote in a news release, “given expensive and competitive housing markets.”

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