It's one thing to read about, and be sort-of aware of, the very high cost of living in the SF Bay Area, and quite another to actually contemplate the real numbers involved. In Oakland, across the Bay from SF, there is currently a teacher's strike, which of course is receiving detailed coverage in the local press. A news article this morning gave some rather startling detail on the cost of housing in the area, with respect to how long it would take for an Oakland teacher to save for a 20% down payment on a home purchase. TWENTY YEARS!! And in San Francisco? THIRTY YEARS! For just the down payment!
Surely that can't be right, I thought. If that were true, how the hell did my wife and I buy our first home back in 1970?
The news article then observed that the median price of a home in SF is now $1.4 million dollars. So 20% of that is about $280k. How on earth is a younger couple with "regular" jobs supposed to save $280k just to begin to buy a home?
To totally cement the impossibility of the deal, it would take about 90% of a teacher's GROSS income just to service the mortgage. Not much left to actually live on.
Back in 1970 my wife and I were hunting for a new apartment, and not having much luck. After an entire Saturday of looking at apartments advertised in the newspaper, in desperation we stopped at a randomly-chosen real estate office which we happened to be parked near. They didn't have much in the way of apartments, but the agent observed that the monthly apartment rental costs were very close to the monthly mortgage payments on a house, if we could come up with the 20% down payment. About how much would that be? Well, houses on the cheaper end of things were going for $20 or 30k, so we were looking at some 4 to 5k as a down payment.
We spent all day Sunday looking at homes, and finally found a decent place for about 24k. Between our savings and a 1k loan from each of our parents, we had no problem coming up with the $4800 down payment. Done!
Once gain it is made very clear that luck, and especially luck on timing, plays such an important part in everyone's lives. We had no control over the fact that it was 1970 rather than 2019. Pure luck in the timing of our births with relation to the major economic cycles in the U.S. and San Francisco. Had we been born fifty years later we could not have ever bought a home here either. My wife was a SF schoolteacher for 35 years, and back in the 70's I had a typical average-paying managerial job. Completely average with respect to income.
I have to wonder how long a situation like this can play out without something seriously breaking in the economy.