Photo: Jeff Gunn/Flickr
Funny how one report can say San Francisco homeowners are the happiest in the country, while another explicitly tells you, “don’t buy out west.”
That’s the advice Bloomberg News gave in a report released last week. It lists the least and most affordable places in the US to buy a first home, and four of the five least affordable cities are in California. San Francisco came in fourth place, while San Jose, Los Angeles and San Diego were in second, third and fifth, respectively. Honolulu, Hawaii took the dubious first-place honor.
The report looks at the 100 largest metropolitan areas in the US, and focuses on determining affordability for first-time homebuyers between the ages of 25 and 44. Affordability rankings were assigned by looking at “the difference between the median household income for that age group and the estimated minimum earnings needed to purchase a single-family home in the region as of 2015.”
All five cities mentioned above registered an “affordability gap” — in other words, in those cities the minimum salary required to afford a mortgage is higher than a prospective first-time homebuyer would be making.
For example, in San Francisco, the median household income is a little under $100,000, which seems like a lot until you realize that’s still $13,491 short of the amount needed to comfortably buy a single-family home in the city.
So is the east coast a better bet? Don’t get your hopes up. One important thing to note is that the report may be skewed as far as New York City goes. Bloomberg News emphasizes that instead of only taking Manhattan or even just the five boroughs into account, data in the report also covers large areas of New Jersey and even Pennsylvania.
The takeaway from all of this? Trulia Chief Economist Ralph McLaughlin says that for those who live in the Midwest, the fiscally wise decision is to buy a home if you plan to be there for two to three years. However, “if you’re in parts of the costly coasts, maybe think twice.”