Is Santa Clara One of the Least Affordable Housing Markets in the U.S?

Casey Fleming

I noticed an article this morning titled “5 Least Affordable Housing Markets in America.” I love reading about my home town, so I clicked. Would Santa Clara and San Francisco Counties be 1 and 2, or would they be further down the list?

How do they determine the least affordable housing markets? The article looks at the income of the average worker in each area and compares it to the mortgage payments required to purchase an average home. The good news is that in the first quarter of 2015 housing was at its most affordable in the U.S. in two years, according to studies done by Realty Trac and Clear Capital.

But in the five most expensive counties in the country, the average worker would have to spend his or her entire salary – or more – just to make the mortgage payment on an average home! This makes it particularly tough for entry-level home buyers, as they have to earn more than 2 ½ times the average wage just to even think about qualifying for the mortgage. Sound familiar? So how did we do in Silicon Valley?

What would you pay to live here?
What would you pay to live here?

Number 5 on the list was Maui, HI. The average worker in Maui earns less than $800 per week – after all tourism is their number one industry – and would have to spend 99% of her income to buy an average-priced home, which would run about $525,000. That’s 99% of her income just for the mortgage payment. Taxes, insurance, HOA dues, maintenance, food and surfing gear are extra. However, it just might be worth it.

When it's 2015 in New York, it's 1967 in Santa Cruz
When it’s 2015 in New York, it’s 1967 in Santa Cruz

Number 4 on the list was Santa Cruz, CA. OK, now we’re talking a little closer to home! Another surfing town, the county just to the south of Silicon Valley attracts a lot of high-tech engineers who would rather walk on the beach in the evening than fight Silicon Valley congestion. The average worker here, however, earns only $857 per week. Those who work in the county are much more likely to work in the tourism industry rather than high-tech. If they work at all. After all, this is Santa Cruz. (If you don’t know Santa Cruz there is actually a movement to “Keep Santa Cruz Weird.) The average home here costs $625,000, and it takes 109% of the average income to afford just the mortgage payments.

These might be slightly more than the median price
These might be slightly more than the median price

Number 3 on the list is Marin County, CA. Another one close to home, the housing market in Marin County is also pushed up by high wages from San Francisco just to the south, with an average home price of $1 million. The average wage is higher here – $1,200 per week, but it would take 119% of that to make the mortgage payment on that $1 million home. And you still haven’t made your BMW payment. (Inside joke – Marinites say that BMW stands for Basic Marin Wagon.)

Number 2 on the list is surely Santa Clara or San Francisco, right? Believe it or not, no.

If you're looking for a good hipster hangout...
If you’re looking for a good hipster hangout…

Number 2 goes to Brooklyn – Kings county, NY. It seems hipsters who can’t afford Manhattan have pushed the average home price up to almost $700,000 here, where the average wage earner would have to spend 126% of his $800 weekly wage to make the mortgage payments. Now if you’re going to overspend on a home and could choose between Brooklyn and Santa Cruz…

Number 1 on the list is of course San Francisco. Wait! No!

Only celebrities and jet-setters allowed to buy here
Only celebrities and jet-setters allowed to buy here

Number 1 on the list is Eagle County, CO, home of the Vail ski resort. The average wage of less than $800 earned by the typical ski-resort worker in this town is good for only a small portion of the cost to buy a home. It would take almost 139% of that to afford the average home of $728,000.

So if you are a surfer bum or a ski bum, you might live in one of the five least affordable areas of the country. Congratulations!

Why didn’t San Francisco and Santa Clara make the list? For the same reason Manhattan didn’t – extraordinarily high wages. So by this measurement, at any rate, these counties are “affordable.” Doesn’t that make you happier?

To read the full article, click here.

Casey Fleming, Author The Loan Guide: How to Get the Best Possible Mortgage (On Amazon)
Mortgage Advisor, C2 FINANCIAL CORPORATION
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