Following a report from last week about how the San Francisco housing market is "overvalued" and most at risk for a burst in its housing bubble, the Merc shares a new report which says that more Bay Area residents are choosing to rent instead of own — and they're paying a heck of a lot to do so.
The report, conducted by New York University's Furman Center for Real Estate and Urban Policy, states that the amount of people who rent their homes has gone up 5%, with the number of homeowners dwindling respectively. The Merc points out that it's a trend that's spread out over much of the country, and of the 53 U.S. metropolitan areas specified in the study, San Francisco and San Jose have the highest renter household incomes. Despite that, and despite the growing population of renters with high-income jobs, residents still have difficulty meeting their high median rents. Moreover, many of those residents are considered "severely rent burdened," meaning that 50% of their income goes straight to paying rent.
Sewin Chan, the report's co-author, also took a moment to illustrate how this rise obfuscates what the rental market might look like to lower-income renters. Chan said, "There’s more renters and more of them have high income and higher education. So that’s sort of masking an affordability problem for people at the lower end."
Given the previous study regarding San Francisco's "overvalued" housing market, it's easy to imagine that hardly anybody can afford a home in the Bay Area. In a report from July, Curbed SF said that the median cost for a home in San Francisco rose to $1.4 million — an unreasonable amount if don't work in tech. That said, it seems to still be an unreasonable amount even if you do work in tech, as TheNextWeb pointed out just a few days ago that tech workers seem to be leaving the Bay Area in droves, with 2016 Census data showing a net-out migration. They had a chat with Tim Helenthal, president and COO of National Van Lines, who cited issues with the housing market. Helenthal told them, "As real estate prices jump in many metro areas, we see a lot of moves away from expensive cities to places with active jobs markets and a more affordable cost of living."
NYU's study went on to show that SF and San Jose renters are more or less incentivized to stay where they are, even if what they're paying is already high. Moving from one apartment to another would often result in an increase in rent, something to the tune of an additional $470 paid here in SF. Combine that increase with the rising cost of homeownership in the city, and it becomes all too clear why many people are choosing to stay where they are in the rental market.