San Diego families need an income of nearly $275,000 a year to afford a mortgage on a home, which is nearly double what it was before the pandemic, according to a new report from the real estate website Zillow.
The study -- which considers "affordable" to be spending no more than 30% of income on housing after paying a 10% down payment -- shows how housing costs are far outpacing wage increases, making the American dream of becoming a homeowner a more and more distant hope.
With that estimate, far less than 18% of households in San Diego County, where the median household income is $96,964, might make enough money to comfortably afford a home, according to the latest U.S. Census Bureau data from 2022. The University of San Diego's Nonprofit Institute, which has conducted similar research, said that number is closer to 11%.
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"A lot of our trends that we are tracking seem to align with what Zillow is saying," Eo Hanabusa, Research Coordinator for USD's Nonprofit Institute said. "We are seeing that when we track the housing affordability index in the region, only 1 in 10 residents can afford a median rate home in the region. So we are seeing that family incomes are being greatly outpaced by housing prices.
According to Zillow, the average monthly mortgage payment -- including insurance, property taxes and maintenance -- after a 10% down payment in San Diego is $5,757, which would take an income of at least $273,613 to be able to afford, according to Zillow's analysis. At the time of the study, mortgage rates were about 6.6%.
It would take a San Diegan nearly 17 years to save for a 10% down payment, assuming a household saves 5% of its total income a month, Zillow said. That's almost double the national average of 8.4 years to save for a down payment where the annual average income needed to afford a home is $106,536.
Of the 50 largest metropolitan areas Zillow ranked, San Diego needed the fourth-highest income in order to afford a home, trailing only three other California cities -- San Jose, San Francisco and Los Angeles.
"The housing crisis is definitely nothing new to the region," Hanabusa said. "And I think the pandemic has really exacerbated a few things. Something that we saw was between 2020 and the end of 2023, the median single family home price increased by almost 200K, about $180,000."
Hope is not lost, though, as buyers are getting creative to make homeownership a reality. Zillow said that more and more frequently hopeful homeowners are relying on family for help, "co-buy" a home, or are buying homes with the intent of renting out a portion.
Another way San Diegans may be able to afford a home is to move elsewhere. The cities with the lowest income required to afford a mortgage were Pittsburgh; Memphis, Tenn.; Cleveland, Ohio; and New Orleans, according to Zillow.
The Nonprofit Institute conducts a quarterly poll of San Diegans and has found 38% of residents are considering moving away from America's Finest City.
"When asked why, 75% of those individuals responded that it was simply just too expensive to live here," Hanabusa said. "And, in that same poll, we also asked residents to rank their level of concern for a variety of quality of life issues here in the region. And the top three were homelessness, affordable housing, and hunger and poverty."
"We can really tell from this data that the housing crisis is really at the forefront of people's minds, and it is stressing them out. And for some, it is enough for them to consider moving out of the region," she added.
The median price of a single-family home last month was $1.043 million compared with $899,000 last year -- up more than 16% this year, according to data the Greater San Diego Association of Realtors released Tuesday. A condo or townhome came in at $662,000 this year compared with $618,500 last year.
The most expensive home sold in San Diego County in February 2024 was a Spanish-style beach home in Coronado that went for $28 million.
