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Can You Afford a Shack in The Bay Area?

Updated: Jun 16, 2022 11:29
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Probably not. Well, maybe?

For years many people have felt priced out of buying  a home in The Bay Area. We talk about it with a tone of defeat. We feel stuck and wonder if being priced out of The Bay means there isn’t a place for us here.

Scouring real estate sites and listening to friends complain about housing costs isn’t going to demystify whether being priced out of The Bay Area is true or false for you.

Sure, you can afford a $10 avocado toast or $5 every morning on your favorite coffee, that’s true. In the Bay Area, we live in a world where we spend money on trendy food before we think of our future. We justify living with 5 people because our rent is “only” $1,500 a month. We recognize that our spending is out of control but we keep spending anyway. So when we look for a house, we want that “90210 house”. Something posh and trendy where our avocado toast can look chic under perfect lighting. Something big enough for every dream and hope to fit in. Something with a view. Something that will put roots down in The Bay.

You can have this for “just” a quarter million dollars

As a spoiler to the rest of this article, the likelihood that a normal person on their own can purchase a home in The Bay Area right now is very low. Let’s break down some reasoning as to why and how you can determine for yourself what you can afford.

Start by looking at what you can afford and getting honest about your finances with a mortgage agent you trust. I’ll admit, I’m not an expert, but I love to research this stuff and want to empower my friends to get into the housing market if they can. As my realtor friend Jess once said, “you have to just get on the escalator”. Meaning, if you want to buy a house you can’t just stand there complaining and waiting for something to change.

What can someone making the Average Salary in San Francisco afford a home in The Bay?

One of my favorite ways I’ve seen to calculate what a person can afford is something I read via Financial Samarai, “Limit the value of your target home to no more than 3X your annual household gross income.” Therefore, if you make 78K a year (the average salary for San Francisco according to this site)… than you can afford something around 234K. For this article, let’s round it up to $250K.

A monthly payment for 250K, according to, is $1,377. Feels reasonable compared to rent? But that’s before any insurance or taxes. As a rough estimate, you can expect another 1K on top of that depending on which city and county you live in.

To make things a little more depressing, there are less than 5 homes you can buy in The Bay Area – most of which are complete tear downs or uninhabitable. Often disguised as “a contractor’s special”, these types of homes would likely need a complete overhaul which is $$$ as you can imagine.

Here are a couple of the cheapest houses in the Bay Area I found online:

This “Art Gallery” and fixer-upper in San Pablo that owes someone a tent and leaks is 250K

Your ideal "art studio" complete with finely painted murals for sale

Your ideal “art studio” complete with finely painted murals for sale – images from

This literal shack in Marin is $235K

Maybe it’s chic to pretend you’re living like Little House on The Prairie in this place? – image from

Let’s assume you make a little more than the average salary:

What you can afford is deeply personal and really depends on your debt to income ratio. When thinking about taking on a mortgage, I do believe you should be as conservative as possible. Some mortgages allow you to borrow more than others and some have lower down payments. However, conservatively, you shouldn’t spend more than 30% of your monthly income on your house payment.

That downpayment is a hurdle that most can’t get over. It’s hard to save up when you’re already shelling out so much in rising costs of goods and a massive rent to pay each month. However, before you get too deep into finding your dream home, know that most conventional mortgages require 10% down. For an FHA loan, you can put down less, but monthly mortgage insurance will be tacked onto your monthly payment because it’s a riskier loan.

This Full House beauty is worth over 5.5 Million dollars

The actual median sale price for homes sold in San Francisco is 1,094,905 according to Zillow

A million dollars is well above what a normal average person could afford. According to Domicile Real Estate, you would need 100K down and 150K a month in gross income to qualify for this type of home assuming you don’t have a ton of debt.

It’s depressing to think and talk about all of this because we was made to believe that buying a home and planting roots was the American dream. Some folks are getting crafty and going in on properties with good friends. Talking to Robin Gilmore, a mortgage agent out of San Diego, spoke about how it is more and more common these days to see people buy property as a group.

“I am seeing an increase in people going in together – mostly on units (both families and friends). Your buying power is usually higher! The loan is not at all complicated. You can have up to four borrowers on any given loan.”

Will the pricing of homes in The Bay Area go down?

Talking to real estate agents that I know, they say that the market right now is “flat”. Prices aren’t going down but they aren’t rising as swiftly either. There are also less offers happening on each property. This means that there is less competition than there was in the Spring when it comes to buying a home in The Bay Area. But as far as prices going down; maybe? It’s hard to tell what’ll happen.

According to Market Watch, people are more spooked by the rising interest rates & “mortgage applications have fallen to the lowest level in 22 years“. However, there’s still considered a shortage in inventory and with incomes strong, there isn’t a huge signal to point to prices of homes going down. We will see the price of homes in The Bay Area increase but not at the previously expected rate according to The Chronicle, “Zillow expects U.S. home prices to grow 14.9% from March 2022 to 2023, down from an earlier forecast of 17.8%. Zillow sees slower increases in the San Francisco metro area of 13.8%.”

Abner Phelps House, the oldest house in SF

I admittedly can’t afford this house – Abner Phelps House, the oldest house in SF

There is some talk that we’re headed into a recession. With massive layoffs and hiring freezes within companies like Netflix , Uber, Paypal, and more it may be just what we need to see some home prices go down if strong incomes are a reason prices aren’t shifting. But I’m not an expert, just someone who loves to talk about these things. 

Best you can do is find out what you can afford and then make a decision as to whether that dream of buying a home is really the version of the American dream you’re looking for. If you can afford it, buy that shack and fix it up – apparently lumber prices are going down.

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Katy Atchison

Katy Atchison

Katy is a professional smiling machine raised in The Bay Area since the age of 3. While other kids were attending summer camp & soccer practice, she was raised selling wares at craft shows with her working artist parents and spent vacations in a small 1920s Montana log cabin. This has all given her a unique perspective on the ever-changing texture of San Francisco and the Greater Bay Area. Currently a blend of all that is The Bay Area - she's a web designer at a tech-company, artist and DIY teacher.

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