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Home Affordability in 2025: San Francisco, San Jose, and Beyond

Home Affordability in 2025: San Francisco, San Jose, and Beyond

As home prices continue to climb, affordability remains a major hurdle for prospective buyers across the U.S. Recent data from Realtor.com highlights the steep income requirements needed to purchase a median-priced home in 2025, with West Coast metros like San Francisco and San Jose leading the pack. This blog explores the latest trends, compares affordability across key cities, and offers insights for navigating today’s housing market.

The Rising Cost of Homeownership

Nationwide, the annual income required to afford a median-priced home has surged to $114,000 in April 2025, a staggering 70% increase from $67,000 in 2019. This reflects a broader trend of escalating home prices outpacing wage growth, which has risen only 34% from 2019 to 2024, according to the Economic Policy Group. For many Americans, the dream of homeownership feels increasingly out of reach, especially in high-cost coastal markets.

San Francisco: A 30% Income Jump Since 2019

In the San Francisco metro area, homebuyers now need to earn $263,023 annually to afford a median-priced home, a 30.5% increase since 2019. This figure is more than twice the national average, with median home prices hovering near $1 million. While the Bay Area has long been known for its pricey real estate, this gap underscores the growing challenge for middle-class buyers.

San Jose: The Nation’s Priciest Market

San Jose tops the list as the least affordable metro in the U.S., requiring an annual income of $370,069—over three times the national average and a 54.3% increase since 2019. With median home prices also near the $1 million mark, San Jose’s housing market remains a tough nut to crack, even for high earners.

Other West Coast Hotspots

Other California metros aren’t far behind:

  • Los Angeles: Requires $315,892 annually, up 86% since 2019.

  • San Diego: Needs $258,926, a 73.4% jump from 2019.

These cities highlight the West Coast’s persistent affordability crisis, driven by high demand, limited supply, and soaring prices.

Signs of a Shifting Market

Despite these challenges, there are glimmers of hope for buyers. Realtor.com’s chief economist, Danielle Hale, notes that the market is showing signs of shifting toward a buyer’s market:

  • Rising Inventory: Nationwide, active listings are up 30.6% compared to last year, surpassing April 2020 levels. The West (+41.7%) and South (+33.3%) lead the way, with San Jose (+67.6%) and San Diego (+70%) seeing significant gains.

  • Price Flexibility: Sellers are increasingly open to price reductions, offering buyers more negotiating power.

  • More Choices: The increase in homes for sale gives buyers more options than they’ve had in years.

However, inventory remains below 2017-2019 norms, meaning competition is still fierce in many markets.

Affordable Alternatives: Rust Belt Cities

For those seeking more affordable options, Rust Belt cities offer the best value:

  • Pittsburgh: A median home price of $243,724 requires an annual income of just $64,427.

  • Detroit: With a median price of $253,575, buyers need $67,031 annually.

  • Cleveland and Buffalo also rank among the most affordable, making these metros attractive for budget-conscious buyers.

These cities provide a stark contrast to the West Coast, where incomes over $250,000 are often necessary.

Navigating the 2025 Housing Market

For prospective buyers, preparation is key. Here are some tips to improve your chances in today’s market:

  1. Boost Your Income or Savings: In high cost areas like San Francisco and San Jose, consider side hustles or relocating to a more affordable region.

  2. Monitor Inventory Trends: Keep an eye on markets with rising listings, like San Diego and San Jose, for better deals.

  3. Work with a Realtor: A knowledgeable agent can help you navigate price reductions and negotiate effectively.

  4. Explore Financing Options: Look into first-time homebuyer programs or adjustable rate mortgages to manage high costs.

The 2025 housing market presents both challenges and opportunities. While San Francisco and San Jose remain prohibitively expensive, growing inventory and seller flexibility could create openings for savvy buyers. For those priced out of coastal markets, Rust Belt cities like Pittsburgh and Detroit offer affordable alternatives. Stay informed, plan strategically, and consult with real estate professionals to make your homeownership dreams a reality.

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