What “Normal” Affordability Really Means
San Francisco’s housing market has undergone dramatic shifts over the past several years. For the first time in a long while, mortgage affordability is being labeled “normal” by some analysts. But for most prospective buyers, especially first-timers, this so-called normal is anything but affordable.
At LBC Mortgage, we work with buyers every day who are navigating this complex market. We understand the numbers, but more importantly, we understand the people behind them—families trying to buy a home, young professionals chasing stability, and investors looking for smart opportunities.
Affordability in housing is typically measured by the share of a household’s income that goes toward mortgage payments. For years, San Francisco far exceeded typical affordability thresholds. But recently, that ratio has come down.
Affordability Compared to 2018 Levels
According to Redfin, the average San Francisco household spent around 74% of their income on mortgage payments in July 2018. Today, that figure has dropped to just over 67%. That’s a significant improvement, but still far above the 30% ratio that’s considered truly affordable by most financial experts.
This shift is what led analysts to say affordability is now “normal.” But for most working households, especially those earning below the median income, the monthly payment required to own a home in San Francisco is still incredibly high. It’s only “normal” when compared to previous years that were already unaffordable.
A Return to “Normal” Doesn’t Mean Relief
The label might suggest that the market has become more balanced, but that doesn’t reflect the actual experience of most buyers. Home prices remain steep, and so do monthly costs. For many, especially first-time buyers, the bar for entry is still out of reach.
What’s Driving the Shift in Affordability?
The recent changes in affordability come from two main factors: slow home price growth and rapid income increases in the Bay Area. But neither of these has been dramatic enough to fix the root issue.
Home Prices Are Rising More Slowly
Since 2018, San Francisco’s home prices have grown just 8%. Compared to the national average increase of over 60% during the same period, that’s relatively mild. While this has helped stabilize the market somewhat, prices are still sitting at levels that only the highest earners can afford.
Incomes Have Risen Faster Than Average
Bay Area incomes have grown at a faster pace than most regions in the country, rising around 7.7% annually. This has helped slightly offset the high cost of borrowing. But again, this only applies to higher-earning households. Many working families, especially those without tech industry salaries, haven’t seen enough income growth to make homeownership viable.
Why Buying Is Still Out of Reach for Most
Even with affordability improvements on paper, the practical reality is much different. Several barriers continue to make buying a home in San Francisco a major challenge.
Mortgage Rates Are Still High
Interest rates remain around 6.7%, far from the historic lows of recent years. This adds hundreds—or even thousands—of dollars to monthly mortgage payments. Even a well-qualified borrower can struggle to make the numbers work with rates at this level.
At LBC Mortgage, we help clients monitor rate trends closely and take advantage of timing opportunities. But rates alone aren’t the full story.
Property Taxes and Insurance Add Pressure
In San Francisco, property taxes and insurance costs can significantly inflate the total cost of ownership. These ongoing expenses are often underestimated by first-time buyers. We make sure our clients understand the full financial picture—not just the headline mortgage number.
Down Payments Are a Major Hurdle
With median home prices around $1.2 to $1.4 million, down payments of 20% can easily exceed $250,000. That’s beyond what most people can save, even with good incomes. Many buyers rely on family gifts, assistance programs, or shared ownership strategies.
We work closely with clients to explore creative financing options, including lower down payment programs, jumbo loans, and portfolio lending products that offer more flexibility.
Even a 0% Interest Rate Wouldn’t Fix It
A recent analysis from Zillow highlighted just how deep the problem runs. Even if mortgage rates dropped to 0%, buyers in San Francisco would still spend more than 30% of their income on housing costs. That’s a sign that the issue isn’t just about interest rates—it’s about the underlying price of housing.
This reinforces what we tell our clients: strategy matters more than timing. Waiting for rates to fall may not be enough. Smart planning, creative financing, and expert guidance are key.
Why Buyers Still Choose LBC Mortgage
In a market as challenging as San Francisco, experience and flexibility are everything. At LBC Mortgage, we go beyond the numbers. We offer personalized mortgage solutions that match each buyer’s unique situation.
Tailored Loan Products for Complex Needs
From jumbo loans to down payment assistance, we specialize in finding products that fit high-cost areas like San Francisco. Our network includes a wide range of lenders, giving us the flexibility to match clients with the right program.
Expert Advice Every Step of the Way
Our team understands the complexities of Bay Area real estate. We help clients break down total monthly costs, prepare competitive offers, and avoid costly mistakes. Whether you’re buying your first home or investing in a second property, our insights give you an edge.
A Human Approach in a High-Stakes Market
Buying a home here isn’t just a transaction—it’s a life-changing decision. We take that seriously. Our advisors are accessible, transparent, and focused on long-term relationships, not quick deals.
The Future of Affordability in San Francisco
While some cities may reach broader affordability in the next 5 to 10 years, San Francisco faces more entrenched challenges. Limited housing supply, zoning restrictions, and high land costs all contribute to the ongoing strain.
Even as incomes grow and mortgage rates shift, it’s unlikely that housing here will become truly affordable without major policy and development changes. That means buyers will continue to face a competitive landscape for years to come.
Contact Us Today
San Francisco’s mortgage affordability may have returned to a technical “normal,” but that normal is still difficult for most. High home prices, large down payments, and elevated monthly costs keep many would-be buyers sidelined. But that doesn’t mean homeownership is impossible.
At LBC Mortgage, we help buyers understand their options and move forward with confidence. Whether it’s your first home or your fifth, we’re here to find a solution that works—for today and for your future.
