Welcome to San Francisco, where high-paid techies have relocated in droves, and everyone else is moving out as the housing market explodes into the wildly unaffordable.
The median price of a single-family home surged in March by 25 percent, year-over-year, adding over $337,000 to the median price tag to hit an impossible $1,687,500. The median condo sales price was around $1,250,000, according to the San Francisco Real Estate Market Report.
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The good news is that it’s at least less of a jump than in February, when prices shot up 31 percent, making the median single-family home price an even $1.7 million.
Since March 2012, six years ago, median house prices in San Francisco have skyrocketed 143 percent, according to data published by Business Insider.
Houses are sold overpriced, and who can blame sellers? After all, they are gone only a few days after being listed, so fair is fair.
The sale of the year that grabbed media attention was a 6,350-square-foot home listed at $7.99 million and then sold for $9.6 million after only nine days on the market.
Living beyond your means is lent new meaning in San Francisco today.
According to CityLab, the average San Francisco household would have to spend more than nine times its annual income to fully pay off a median-priced home in the city.
The average San Francisco home costs 9.2 times the city's median income. Only two other cities in the U.S. are more expensive: Los Angeles, where homes cost 9.6 times the median income, and San Jose, where they cost 9.5 times the median income.
“Our calculations reflect the years of income it would take to pay for the purchase price of a home only,” said CityLab’s Richard Florida. “They do not account for the added expense of mortgage interest.” Related: How Russian Gold Production Will Help Ditch The Dollar
The California Association of Realtors [CAR] released its Quarterly Housing Affordability report concluding that the recommended yearly salary to buy a house in San Francisco rose to an alarming $333,000-plus.
It’s all leading to the San Francisco exodus. People are leaving in large numbers, more so than any other U.S. city. In fact, it’s so bad that reports say there is a shortage of U-Haul trucks and moving-related expenses are being inflated in an effort to profiteer from the migration.
A Bay Area Council Poll shows that 46 percent of residents say they plan to move away soon, up from 40 percent last year and 35 percent in 2016.
Still, while San Francisco's market was listed as overvalued, it still doesn't represent a bubble risk, compared with other cities in the world.
On the UBS Global Real Estate Bubble Index, San Francisco narrowly escapes thanks to “strong economic fundamentals amid the astonishing boom of tech companies.” So the same group causing the housing price surge, is also keeping the bubble afloat.
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The city with the biggest bubble-bursting risk, according to UBS, is Toronto, where housing prices have risen a worrying 50 percent over the past five years.
But bubble or no, San Francisco is fast becoming one of the least desirable cities in the U.S. simply because no one can afford to live within their means.
By Michael Scott for Safehaven.com
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