San Francisco home prices gain US$60 an hour – four times the minimum hourly wage of US$14
San Francisco and San Jose are expected to be among the most expensive markets in the US this year, according to real estate site Zillow
Houses in San Francisco earn more per hour than most of their owners – or anyone else, for that matter – do at work, a new report finds.
The study by property site Zillow finds that houses in the Bay Area city typically appreciate at a rate of US$60.13 for each working hour, calculated based on a 40-hour work week.
Minimum wage workers in San Francisco currently take home US$14 an hour, rising to US$15 an hour this summer. And the average hourly wage in the San Francisco-San Mateo metro area was US$36.61 in 2016, reported the US Labor Department. The national average hourly wage was US$23.86.
In nearby San Jose, California, meanwhile, homes typically appreciate US$98.81 per working hour, Zillow reports. The city has a minimum wage of US$13.50 an hour.
The typical US homeowner earns US$7.09 in equity for each working hour, compared to the federal minimum wage of US$7.25 an hour, according to the report.
The Zillow report compares the average equity gain per working hour to the minimum wage in 50 US cities. Of course, housing prices and hourly pay are not exactly equivalent, the study concedes. The comparisons are more of a number-crunching exercise.
“It is not money that accumulates directly into a current account or that can be spent on daily needs,” wrote Zillow senior economist Aaron Terrazas. “Equity is only available once a homeowner chooses to sell a home, and even then is often subject to various taxes and other expenses.”
Housing prices continue to skyrocket in San Francisco and the Bay Area, and they are not expected to slow down any time soon.
San Francisco and San Jose are poised to be among the most expensive markets in the US throughout 2018, reported Zillow, with median home values of US$1.1 million in San Jose and US$893,000 in San Francisco. A renter or prospective buyer would need to earn at least US$170,000 a year to live comfortably in either market, according to HSH.com.
“The way the economy in the Bay Area is right now, it’s like the demand is on steroids,” Michael Rawson, director of the Public Interest Law Project based in the Bay Area, told Newsweek magazine. “It drives the land prices through the roof.”
In Silicon Valley, a home that burned down two years ago just went on the market for US$800,000, though property agents say the price reflects the value of the lot in San Jose, California, more than the uninhabitable home.
In March, a two-bedroom, one-bath home near an Apple campus in nearby Sunnyvale sold for US$2 million – a record US$2,358 per square foot, reported KPIX television station. And in 2017, a fire-gutted house in San Francisco’s Bernal Heights neighbourhood sold for US$700,000, according to Fortune magazine.