Even Starter Homes in Bay Area can cost almost $500,000
There is some good news and bad news for first time home buyers in the Bay Area. The good news is that there are more starter homes coming to market across the region. The second quarter saw increases in starter homes by 10.9 percent in Oakland, 24.1 percent in San Jose and 26.1 percent in San Francisco. The bad news comes from a report by Trulia, which states that the traditional buyers of starter homes, comprised of households in the lower third of the income bracket, have basically been priced out of the market. Ralph McLaughlin, chief economist for Trulia and the author of the report, states:
“…those homes are nowhere near affordable for traditional starter-home buyers, so it’s not great news for those trying to get into a first home.”
Trulia defines a starter home as one with a value in the lower third of the market. According to the report, traditional buyers of starter homes would spend 60.5 percent of their income on paying the mortgage on a starter home in the Oakland metro area, which includes Alameda and Contra Costa counties. Over in the San Jose metro area, which covers Santa Clara and San Benito counties, the percentage is 78.4 percent. It’s a whopping 99.6 percent in the San Francisco metro area, which includes San Mateo County and the city of San Francisco. According to Trulia, the median price of a starter home is $286,300 in the Oakland metro area, $445,667 in the San Jose metro area and $535,823 in the San Francisco metro area. The new starter homes in the Bay Area are more than likely going to be bought by someone other than a first time home buyer, which will create more problems for lower income people and families.