The Department of Housing and Urban Development issued a report this week describing a family income of $117,000 as ‘low income’ in San Francisco’s Bay area. The classification earns its justification off of rising property prices, where even crumby and tiny burned out homes are selling for near or in excess of $1 million, due to the high demand and limited supply of properties. If tech companies like Facebook and Google are compensating their employees well, and they want to find properties in the area, they had better be prepared to shell out some big bucks for it.
CBS Evening News reports:
SAN FRANCISCO — A report out this week from the Department of Housing and Urban Development finds the median price for a single-family home in the Bay Area is now $935,000. A family earning $117,000 now qualifies as “low income” in the region.
CBS News went to see California’s red-hot housing market with realtor Larry Gallegos. He showed us a house you would think he couldn’t give away. But Gallegos says the home, complete with leaks in the roof, sold for $1.23 million. The buyer beat out six competing offers, all above the asking price.
“It’s a little mind-blowing, but it is the norm around here,” Gallegos said.
That norm is fueled by thousands of well-paid tech workers who have driven up the median price of a San Francisco house to $1.6 million dollars, the highest in the country. While housing prices are rising faster than incomes nationwide, nowhere is it more evident than in the Bay Area, where home values have soared a staggering 64 percent over the last five years.
That could explain how a 1,000-square-foot shell of a house in the heart of Silicon Valley sold for close to $1 million dollars. Also recently listed? A burned-out home near Google and Apple.
Serious buyers also better bring cash. Just ask Sally Kuchar, who tracks real estate for the website Curbed San Francisco.
“We cannot afford to live here, nor could we afford to live pretty much anywhere in the Bay Area,” she said.
The same goes for teachers, hospital workers, police officers and working people all over, who make up the lifeblood of any community.
One flier could speak for the entire Bay Area housing market: “Enter at your own risk.”
But this new trend doesn’t bode well for the rest of the community which doesn’t find itself employed by the mega tech companies of Silicone Valley. Those who are employed in the public or service sectors are increasingly finding themselves in a position where their incomes can no where near approach the rising cost of living, designed to exploit the wealth of the tech market. Is San Francisco finding out that it is becoming an economy of, for, and by the IT industry?