Interest rates are expected to come down sometime before the fall, the traditional end to peak home-buying season, Wei said. But a continued shortage of supply is still likely to keep home prices high, he noted.
“I wouldn’t expect a significant increase [in affordability],” he said, adding that he expected the year to end with less than 20% of earners in California being able to afford their county’s median-priced home. “That’s what we can hope for.”
Seeing San Mateo and Santa Clara counties at the top of the list of least affordable counties is no surprise to Ahmad Thomas, CEO of the Silicon Valley Leadership Group, a business advocacy organization. The region’s tech companies have long drawn workers from across the country, leading to a high cost of living for at least the last two decades, he said.
But those higher costs could be justified because they allowed workers to live in close proximity to good-paying jobs, Thomas said. Now, though, as remote work enables many employees to live anywhere, he said the Bay Area’s high housing costs are becoming a vulnerability for the companies that first attracted those workers — and for the region as a whole.
“The advantage that we have versus other regions, it’s not as pronounced,” Thomas said. “It is very hard for working families to make ends meet here, which is not what any of us wanted to see.”
The growth in home prices didn’t just come from tech companies adding new jobs; it was also a product of cities not allowing enough new housing to be built, said Greg Magofña, chief strategy officer at California Community Builders, a housing advocacy group focused on closing the racial wealth gap.
“We just stopped building, and stopped acknowledging that [children born in the region are] going to have to move out of our parents homes at some point,” he said. “Or, if you’re like me and are displaced from the Bay Area, you move back into your parents’ front bedroom.”
From 2010 to 2019, the Bay Area added six new jobs for every new home, according to a 2021 report from the rental listings site, Apartment List. In the San Francisco-Oakland-Berkeley and San Jose-Sunnyvale-Santa Clara metropolitan regions, jobs grew by 29% and 33%, respectively, between 2010 and 2020. During the same time period, the number of housing units grew by just 5% and 7%, respectively.
