The San Francisco housing market has been a tough place for buyers in recent years, and Zillow’s new numbers say things might not be improving. Thanks to increased interest rates on mortgages as well as high prices, many potential homeowners are being priced out of the market.
Even though we have seen rental prices increase since 2021, the rising cost of mortgages means that renting is still cheaper than buying, “Mortgage payments are higher than rent in 45 of the 50 largest U.S. metros, up from 22 in 2019,” says Matt Kreamer, the Senior Manager of Data Public Relations for Zillow.
This news isn’t all bad for everyone. With demand for homeownership going down, price increases are starting to slow, as are sales. This boosts the inventory of homes that are available for purchase, and even means sellers could be more willing to cut prices on properties.
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Zillow broke down some of the numbers for us in the Bay Area
San Francisco housing costs
- The typical home value is $1,500,189, up 18.5% year over year and 33.6% since 2019
- Mortgage payments on a typical home are $8,117 a month. That’s up 52.8% compared to May 2021 and 5.4% over April
- Typical rents are $3,214, up 10.3% since May 2021
- The share of listings with a price cut is 8.3%, compared to 5.8% in April
Potential buyers in San Jose have it even tougher, with prices sitting even higher than those within San Francisco city limits.
San Jose housing costs
- The typical home value is $1,706,565, up 22.4% year over year and 37.6% since 2019
- Mortgage payments on a typical home are $9,136 a month. That’s up 57.1% compared to May 2021 and 5.4% over April
- Typical rents are $3,295, up 12.1% since May 2021
- The share of listings with a price cut is 8.1%, compared to 4.7% in April
One bit of potential good news for 1st-time California homebuyers is a new billion-dollar fund being proposed by state lawmakers to help first-time homebuyers with their down payments. The program would provide 17% toward the purchase price of a first home, either eliminating the need for a large down payment, or even potentially covering the entirety of the down payment for homebuyers, who would also receive mortgage counseling.