Housing Affordability

What portion of household income is spent on housing?

Housing Affordability

Housing affordability refers to the share of household income spent on housing. This measure, which can be broken down by income level and by ownership versus rental, captures the burden of housing costs on a household budget. Households with housing costs that consume more than 35 percent of monthly income are considered to be excessively burdened.

Housing costs in the Bay Area are higher than in almost any other place in the country, varying dramatically even within our own region. At the same time, many of our region’s workers earn higher incomes than those in similar jobs elsewhere. The relationship between household incomes and housing costs is an excellent gauge of regional affordability – and one of the most critical issues facing the Bay Area.

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

The share of Bay Area households excessively burdened by housing costs has increased since 1980, as home prices and rents have spiked at a faster rate than income growth. In 2015, nearly one in three Bay Area households spent at least 35 percent of its income on housing. Historically, homeowners have been less cost-burdened than renters; this divergence has grown in recent years. Following the Great Recession, the share of excessively burdened homeowners has declined from 33 percent in 2009 to 23 percent in 2015, while the share of excessively burdened renters remained at 40 percent.

Bay Area homeowners have benefited from a number of trends in recent years. The housing bust, combined with high foreclosure rates, allowed many of today’s owners to buy homes in a period of relatively low prices. Low interest rates also reduced the cost of owning for existing and new homeowners at the same time as income growth accelerated for higher-earning households. The result has been improved housing affordability for owners. Renters, many of whom have been priced out of the home-buying market by comparatively lower incomes and tighter lending standards, have seen little relief from rising rents and stagnant wages.

Read More

Historical Trend for Housing Affordability

Regional Distribution
Low- and moderate-income households are heavily burdened by the region’s housing market.

The vast majority of low-income Bay Area households experience an excessive housing cost burden, regardless of where they live. Increasingly, even moderate-income households face excessive cost burdens. For example, nearly 45 percent of Bay Area households earning $50,000 to $75,000 per year spent more than 35 percent of their income on housing in 2017. Only once a household’s annual income exceeds $100,000 does the region become marginally more affordable. Just six percent of these high-income households are considered excessively burdened, with more than half of the Bay Area’s high-income households spend less than one-fifth of their annual income on housing.

2017 Housing Affordability by Income Level

Local Focus
While affordability has worsened throughout the Bay Area, the greatest changes have occurred in the North Bay.

27 percent of San Francisco households are considered excessively burdened, bringing the share within one percentage point of the lowest on record for the city. Unlike the rest of the region, this trend has been powered by increases in affordability for renters. In fact, San Francisco reported the lowest share of excessively-burdened renter households on record in 2017. This is due largely to higher-income households flocking to San Francisco in recent years, and excessively-burdened lower-income renters filtering out. While rent control has kept housing affordable for existing residents in San Francisco, it has managed only to slow the trend.

Solano, Sonoma and Marin counties all have seen their shares of excessively-burdened households grow faster than the regional average. Despite home prices and rents that generally are much lower than those in San Francisco and Silicon Valley, lower median incomes mean that households in these counties typically experience more acute affordability challenges. This is due in part to the rising share of renter households in these areas, a group more vulnerable to rising housing costs given fluctuating rents. Existing residents also face growing competition from residents of pricier bayside cities seeking more affordable housing options, while slow housing production has failed to meet this increased demand.

Read More

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

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 of these metro areas, but higher median incomes in the Bay Area mean the average resident here finds it easier to pay the higher housing costs. Meanwhile, Dallas, Atlanta and Washington have the lowest share of excessively-burdened residents among the 10 largest metro areas, led in part by higher incomes in Washington and lower housing costs in the southern metros.

Metro Comparison for 2017 Housing Affordability


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 (2009-2015)

Form B25095 (2009-2015)

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 (less than 20 percent, 20 percent to 34 percent, and more than 35 percent) that work for all years. While some studies use 30 percent as the affordability threshold, Vital Signs uses 35 percent as this 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.