Housing

Income to Own Home in San Jose Hits $461,000

Douglas A. McIntyre

Published: November 14, 2024 6:25 am

24/7 Wall St. Insights

• A recent analysis reveals that the price of a home in San Jose is the highest in the nation.
• The annual income needed to own a home there is $461,000.
• Also: Dividend legends to hold forever.

The San Jose metropolitan area is located in Silicon Valley, the world’s tech capital. According to data from the third quarter, the price of a home there is the highest in the nation, at $1.89 million. One widely followed measure indicates that the income needed to own that home is $461,000 a year. That has doubled since the third quarter of 2019, just before the COVID-19 pandemic began. (The U.S. government put the U.S. median household income at $81,000 in 2023.)

Oxford Economics recently published its “Housing has become less affordable across all metros” report. Its study examined what it would take to own a home in 172 metros. Nationwide, the figure was $107,000, based on a national median home price of $408,900. The study defines the cost of home ownership based on “ the sum of monthly mortgage payments—after a 20% down payment—along with property taxes and homeowners’ insurance payments does not exceed 28% of the borrower’s income.” Using that measure, San Jose is the least affordable metro.

Some of the top five least affordable home ownership metros were in California, including Los Angeles, San Francisco, and San Jose. One of the top five outside California was Honolulu.

According to the Census Bureau, San Jose has just over 1 million residents and 331,000 households. The median household income is $136,000. Based on Oxford Economics calculations, only 10% of the population in San Jose can own a home at the median home price using its metrics, so the figure from the Census Bureau makes some sense. That is why it is identified as the “least affordable” in the country.

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