If you want to buy a home in San Francisco, you better have $1 million to spend. At least.
A whopping 81% of the homes in the metro San Francisco area cost $1 million or more, according to a new report from the housing website Trulia. That’s an increase of 13.7% since October 2017.
Trulia ranked 100 U.S. metro areas by how quickly they are adding million-dollar homes, year-over-year. San Francisco didn’t come out on top of that ranking — its Bay Area neighbor San Jose just edged it out for the No. 1 spot, with a 14.2% year-over-year increase in million-dollar homes.
But San Francisco tops the list of cities when it comes to the highest percentage of million-dollar homes overall in 2018.
In San Jose, 70% of the housing stock is valued at $1 million or more, good for second place, and in yet another Bay Area city, Oakland, 31% of homes are worth more than $1 million. From there, the list drops off sharply, with no other metro area topping 20%.
These million-dollar cities are anomalies in the U.S.: Just 3.6% of all homes nationwide are worth $1 million, Trulia found.
Of course, a major reason San Francisco has become so pricey: well-off tech workers are moving in and fighting for a limited supply of homes. And, to be sure, San Francisco’s smaller size and population compared with other pricey cities — notably, New York City — makes for particularly extreme results in the data.
The spike in the city’s housing prices has happened fast.
In 2012, as the U.S. was still recovering from the 2007-09 recession, just 24% of San Francisco homes were worth $1 million or more. That climbed to 34.7% by 2013 and continued to steadily increase until 2018.
Prices in San Jose followed a similar pattern. In 2012, just 21.7% of homes there cost $1 million or more. That rose to 27.6% in 2013, 32.1% in 2014 and continued to rise until 2018, when 70% of homes in the city are now worth $1 million or more.
Many would-be home buyers would likely balk at those price tags. Nationwide, fewer people say they are planning to buy homes, according to the National Association of Home Builders, a trade group. Just 13% of Americans say they plan to buy a home within the next 12 months, marking the third quarter in which fewer and fewer people say they plan to become homeowners.
This is happening as mortgage rates continue to rise: The 30-year fixed-rate mortgage average is now near an eight-year high of 4.94%, as investors expect the Federal Reserve to continue raising rates.
But for San Franciscans, buying a home is just the beginning when it comes to cost of living. San Francisco is also the No. 1 most expensive metro area for raising a family, according to the progressive nonprofit think tank Economic Policy Institute. The basic budget for a two-parent, two-child household in the area is $148,439 per year, EPI found. The median family income in the U.S. is just $38,203 per year.
Many of the cities that boast the highest number of million-dollar homes are in California, and not just in the Bay Area. Some 20.2% of the housing stock in Orange County, Calif., and 19.6% of homes in Los Angeles are valued at or above the $1 million mark.
That’s one big reason a million more people moved out of California from 2006 to 2016 than moved in, according to the Census Bureau.
Maria LaMagna covers personal finance for MarketWatch in New York.
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