The most expensive major housing market in the U.S. just got a little more affordable — though you’ll still need a six-figure salary to buy a home there.
San Jose, the Silicon Valley tech enclave where companies like PayPal and eBay are headquartered, made headlines in 2016 when its average home price passed $1 million. And they didn’t stop there: the average price of a home climbed to $1.37 million at the start of 2018, according to the National Association of Realtors (NAR).
For the past year, however, they’ve been falling fast. As of the first quarter of 2019, the average home price has fallen 11.1% since the same period in 2018 to $1.22 million. (Economists typically use year-over-year numbers because real estate is highly seasonal).
While home prices in the so-called “capital of Silicon Valley” are down, they’re still far from a bargain. Interested home buyers would need an annual salary of $238,000, more than four times the U.S. median household income, to afford a mortgage on the average San Jose home, assuming a 20% down payment, according to a recent analysis of the data by mortgage website HSH. To put that cost in perspective, that 20% down payment comes to $244,000 — just $10,800 less than the median U.S. home price.
San Jose isn’t the also the only place in the U.S. where prices are moderating or even falling. Other cities, like Naples, Fla.; Norfolk, Va..; and Topeka, Kan., are also saw decreases in year-over-year median listing prices for the first quarter, according to the NAR.
That could be good news for would-be home buyers going forward.
“All the signs are pointing to the fact that people are just having a harder time selling their homes,” Issi Romem, chief economist at Trulia, recently told The Wall Street Journal.