Housing Affordability

What portion of household income is spent on housing?

Housing Affordability

Housing affordability refers to the share of household income expended on housing and can be broken down by income level and tenure (renter versus owner). It captures the burden of housing costs on a household budget, with those households expending more than 35 percent of income on housing considered to be excessively burdened.

Housing costs in the Bay Area are higher than in almost any other place in the country. However, at the same time, many of the region’s workers also enjoy higher incomes than workers in similar jobs elsewhere. The relationship between household earnings and housing costs is the best gauge of regional affordability – one of the most critical issues for our region.

Regional Performance
A significant share of Bay Area households struggle with the cost of housing, with renters often bearing the largest burden.

The share of Bay Area households spending upwards of a third of their incomes on housing has steadily increased since 1980. The housing boom and bust cycles between 2000 and 2010 resulted in the greatest volatility in housing affordability in recent decades, raising the share of cost-burdened households in the Bay Area from 27 percent in 2000 to 36 percent in 2010. Fortunately, the strong economic recovery, combined with mortgage refinancing opportunities, has helped ease housing affordability challenges for many Bay Area households in more recent years. This easing has been felt primarily by homeowners rather than renters.

While the housing cost burden spike of the 2000s has subsided for homeowners, renters are experiencing some of the worst conditions on record. In 2013, the percentage of Bay Area renters considered excessively cost-burdened remained above 40 percent. Homeowners fared better in this key gauge of cost burden, with less than a quarter spending more than the affordability threshold (35 percent of income).

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Regional Distribution
Households earning less than $50,000 a year are heavily burdened by our region’s unaffordable housing market.

The vast majority of households with annual incomes below $50,000 experience an excessive housing cost burden, regardless of where they live in the region. Only once a household’s annual income exceeds $100,000 does the region become marginally more affordable. Only six percent of these high-earning households are considered cost-burdened, although 40 percent of these households still expend more than one-fifth of their household budgets on housing.

Local Focus
Every county in our region has become more unaffordable over the last three decades, but North Bay counties lead the pack in terms of housing unaffordability.

Despite lower home prices and rents in Solano and Sonoma counties, residents of these North Bay counties have disproportionately lower incomes and experience affordability challenges most acutely. While counties with higher housing costs – such as Contra Costa and Santa Clara counties – are expensive to live in, the average household in those counties earns substantially more each year. In contrast to the North Bay, those two counties actually have the lowest share of residents burdened by housing affordability challenges.

National Context
Despite having the nation’s highest housing costs, the Bay Area actually falls in the middle of the pack for affordability, thanks to higher regional incomes.

Dallas and Houston lead the pack for housing affordability, largely due to the relatively low costs of housing in these expansive Texas metro areas. Despite our very high housing prices, the Bay Area remarkably does not top the list for unaffordability. The region ranks fourth, after Los Angeles, Miami and New York. Housing costs are above average in all four metro areas, but higher median incomes in the Bay Area mean residents here find it easier to pay the higher housing costs.


U.S Census Bureau: Decennial Census

Form STF3 – https://nhgis.org (1980-1990)

Form SF3a – https://nhgis.org (2000)

U.S. Census Bureau: American Community Survey

Form B25074 (2009-2013)

Form B25095 (2009-2013)

Image: Flickr (Creative Commons license), Photographer: Frank Kehren

Methodology Notes: 

The share of income brackets used for different Census and ACS forms varied over time; to allow for historical comparisons, income brackets were merged into three consistent bins that work for all years (less than 20 percent, between 20 and 34 percent, and more than 35 percent). While some studies use 30 percent as the affordability threshold, Vital Signs uses 35 percent as that is the closest break point using the standardized affordability brackets above. Historical data for Napa County is unavailable due to an insufficient sample size for renters in a number of years, making it impossible to calculate affordability for all households. All ACS data is for a single year, rather than a rolling average. Income breakdown data is only provided for one year as it is not possible to compare consistent inflation-adjusted income brackets over time given Census data limitations.