According to a new study by Clever Real Estate, home prices have increased four times as fast as incomes since 1960. This ever-widening gap between housing costs and wage growth means the typical family in San Jose and San Francisco spends at least nine times their annual household income to buy a home. This is the highest ratio in the country.
While housing prices have leveled off this year after hitting a peak of $928,000 in May 2018 – according to real estate data firm CoreLogic – home sales have also declined even though more units have come on the market.
An often unseen consequence of the high real estate prices is that many service providers – restaurants, barbers, dry cleaners, and others – have to raise their prices as rents go up.