High-cost cities tend to have higher median incomes, which leads to the simple heuristic that, sure, it’s costlier to live in San Francisco than in Akron, but the people who pay bills there make enough money that they can afford it.
In reality, yes, the median household income in metropolitan San Francisco is higher than it is in Akron (by about $30,000). But that smaller income will buy you much, much more in Ohio. To be more specific, if you make the median income in Akron – a good proxy for a spot in the local middle class – 86 percent of the homes on the market there this month are likely within your budget.
If you’re middle-class in San Francisco, on the other hand, that figure is just 14 percent. Your money will buy you no more than 1,000 square feet on average. That property likely isn’t located where you’d like to live. And the options available to you on the market are even fewer than they were just a year ago, according to data crunched by Trulia. To frame this another way, the median income in metro San Francisco is about 60 percent higher than it is in Akron. But the median for-sale housing price per square foot today is about 700 percent higher.
The gulf between those two numbers means that the most expensive U.S. cities aren’t just unaffordable for the average American middle-class family; they’re unaffordable to the relatively well-off middle class by local standards, too.
San Francisco, by the way, is by no means the most expensive location in the Bay Area.
What we think of as middle or working class still hangs on here by its fingernails, generally because people have inherited paid for homes from their families, or, especially in the case of Asian families, by packing in eight or ten incomes into a single family home.
The recent local bubble in housing, caused by new-rich dot-commers flooding into the City, has changed my own position somewhat. Since these kids aren’t especially interested in living in the ghetto, the overall surge hasn’t done a great deal for my own property. But even if it did appreciate enough to get me above water, I couldn’t sell the damned thing for enough money to afford anything other than a 500 square foot broom closet elsewhere in the City – and probably end up with higher payments to boot.
BTW, some wag in the comments said that the picture above appears to depict the only homes in San Francisco, which might explain why they are so expensive. They are the most famous homes in the City, at least to visitors, who’ve seem them all over the world. They are called “The Painted Ladies” and, while located in a somewhat sketchy neighborhood not far from a ton of public housing, are, indeed, worth several million each.
There is an interesting legal thriller centered on these homes by John Lescroart, one of my favorite writers, called The Motive (Dismas Hardy). All of Lescroart’s meticulously researched novels are set in San Francisco, which adds an additional layer of enjoyment for me. He gets the locations and the zeitgeist right.