Descriptive Title: Housing purchasing capacity of the median income household

Geographic Unit of Analysis: Neighborhood

Home affordability by median household income (2012)
NeighborhoodNumber Two Bedroom Homes SoldMedian Sale PriceMedian Downpayment (10% of Median Sale Price)Mortgage Loan AmountMonthly PaymentAnnual Income needed to afford paymentsNeighborhood Median IncomeMargin of ErrorAnnual Income Affordability Gap
Bayview/Hunter's Point 40 $287,250 $28,725 $258,525 $1,700 $68,000 $48,517 $16,680 ($20,000)
Bernal Heights 46 $650,000 $65,000 $585,000 $3,900 $150,000 $87,013 $23,220 ($67,000)
Castro/Upper Market 30 $935,000 $93,500 $841,500 $5,500 $220,000 $109,054 $24,630 ($110,000)
Chinatown 5 $995,000 $99,500 $895,500 $5,900 $240,000 $19,889 $8,240 ($220,000)
Excelsior 8 $432,500 $43,250 $389,250 $2,600 $100,000 $71,902 $19,481 ($31,000)
Financial District/South Beach 121 $1,650,000 $165,000 $1,485,000 $9,800 $390,000 $29,621 $35,974 ($360,000)
Glen Park
Golden Gate Park NA NA NA NA NA NA NA NA NA
Haight Ashbury 27 $860,000 $86,000 $774,000 $5,100 $200,000 $91,586 $25,857 ($110,000)
Hayes Valley
Inner Richmond 20 $818,500 $81,850 $736,650 $4,900 $190,000 $72,350 $15,439 ($120,000)
Inner Sunset 23 $749,000 $74,900 $674,100 $4,400 $180,000 $91,247 $21,013 ($86,000)
Japantown
Lakeshore 3 $640,000 $64,000 $576,000 $3,800 $150,000 $60,909 $22,425 ($91,000)
Lincoln Park
Lone Mountain/USF
Marina 30 $1,005,000 $100,500 $904,500 $6,000 $240,000 $104,539 $24,095 ($130,000)
McLaren Park
Mission 52 $751,000 $75,100 $675,900 $4,500 $180,000 $65,188 $16,103 ($110,000)
Mission Bay
Nob Hill 44 $863,000 $86,300 $776,700 $5,100 $200,000 $62,990 $16,181 ($140,000)
Noe Valley 31 $1,010,000 $101,000 $909,000 $6,000 $240,000 $110,114 $26,206 ($130,000)
North Beach 10 $924,000 $92,400 $831,600 $5,500 $220,000 $69,913 $26,237 ($150,000)
Oceanview/Merced/Ingleside
Outer Mission 8 $636,000 $63,600 $572,400 $3,800 $150,000 $88,278 $26,349 ($63,000)
Outer Richmond 19 $535,000 $53,500 $481,500 $3,200 $130,000 $76,669 $17,615 ($50,000)
Pacific Heights 54 $952,025 $95,203 $856,823 $5,600 $230,000 $116,135 $29,212 ($110,000)
Portola
Potrero Hill 50 $755,500 $75,550 $679,950 $4,500 $180,000 $113,927 $41,728 ($65,000)
Presidio 0 NA NA NA NA NA NA NA NA
Presidio Heights 10 $857,000 $85,700 $771,300 $5,100 $200,000 $97,397 $43,720 ($110,000)
Russian Hill 45 $875,000 $87,500 $787,500 $5,200 $210,000 $100,507 $35,804 ($110,000)
San Francisco 1,167 $845,000 $84,500 $760,500 $5,000 $200,000 $72,947 $1,028 ($127,053)
Seacliff 0 NA NA NA NA NA NA NA NA
South of Market 127 $1,000,000 $100,000 $900,000 $5,900 $240,000 $67,159 $28,537 ($170,000)
Sunset/Parkside
Tenderloin
Treasure Island 0 NA NA NA NA NA NA NA NA
Twin Peaks 11 $570,000 $57,000 $513,000 $3,400 $140,000 $91,933 $35,969 ($43,000)
Visitacion Valley 7 $430,000 $43,000 $387,000 $2,600 $100,000 $42,598 $21,951 ($59,000)
West of Twin Peaks 6 $833,444 $83,344 $750,100 $4,900 $200,000 $122,809 $35,100 ($75,000)
Western Addition 82 $729,000 $72,900 $656,100 $4,300 $170,000 $54,407 $14,689 ($120,000)

Why Is This An Indicator Of Health and Sustainability?

Homeownership positively impacts the social cohesion and civic participation of a neighborhood, which in turn can impact health. Homeowners are more likely to feel invested in their community. They are more likely to participate in nonprofessional associations and vote in local elections. Additionally, a higher rate of homeownership in a neighborhood has been associated with fewer years of life lost due to cardiovascular disease for residents.a

Interpretation and Geographic Equity Analysis

The vast majority of homes sold in 2012 were priced out of reach for average San Franciscans. The threshold to qualify for below market rate housing units is at or below the area median income level, which according to San Francisco Residential Affordable Housing Monitoring Procedures Manual is $80,950 for a two-person household, and $91,000 for a three-person household.b Based on the home ownership formula used in this analysis, there are only three neighborhoods, Bayview, Ocean View, and Crocker Amazon, where the income required to afford a home was less than the median income level.  

Sales of two bedroom homes were not evenly distributed across San Francisco in 2012. Almost 35% were sold in Mission Bay, South of Market, or the Financial District, downtown, which comprise less than 6% of San Francisco by area. Many were condominiums or other subdivisions of multi-unit buildings. There are no private home sales in the Presidio or Treasure Island, no two bedroom homes were sold in Seacliff, and fewer than five were sold in Lakeshore, Crocker Amazon, and Chinatown. The distribution of sale prices by neighborhoods is shown in Figure 1 above.

The neighborhoods with the most expensive recently sold two-bedroom homes were concentrated in three parts of northeastern San Francisco: downtown, Marina/Pacific Heights, and Noe Valley/Castro. The neighborhoods with the greatest affordability gap were concentrated downtown: Financial District, Chinatown, South of Market, North Beach and Nob Hill. For example, the estimated income required to make payments on a two-bedroom house purchased at the median price the Financial District was $391,000, while the median income of households currently residing there is around $30,000 per year. In Chinatown, required income for new purchase was estimated at $236,000 and the median household earns around $20,000 per year. The neighborhood affordability gap was five or six figures in every neighborhood with available data except Ocean View, where the income required to purchase a two-bedroom house was comparable to the income of established residents. 

Methods

Locations of two bedroom homes sold in 2012 were geocoded to their parcel location and aggregated to determine the median sale price by neighborhood. This median value was used to estimate the affordability of housing in each neighborhood based on the down payment and monthly mortgage payments required to purchase a home at the median price.

A standard formula was used to estimate the monthly mortgage payment (c): 

           

Loan amounts and monthly mortgage payments were estimated based on the following assumptions:

The down payment was estimated at 10% of the sale price.

The principle (P) covers the remaining 90%. 

The interest rate (r) was estimated at 3.66%

The number of payments (N) was calculated for a 30 year mortgage as 30*12 or N = 360.

In addition to repaying the mortgage, the following additional costs of owning a home were factored into the monthly payment amount:

Property taxes in San Francisco were estimated at 1.17% of the sale price.

Hazard and private mortgage insurance costs were estimated at 1% of the sale price.

The neighborhood affordability gap is calculated by subtracting the neighborhood median income, calculated from American Community Survey (ACS) data, from the income required to afford a two-bedroom home, assuming the monthly payment calculated above comprises 30% of household income.

Limitations

  • Sample sizes for some neighborhoods were small, for instance no two bedroom homes were sold in the Presidio, Treasure Island, or Seacliff, only 3 were sold in Lakeshore, 5 in Chinatown and 5 in Crocker Amazon. Median sale prices may be less representative than for neighborhoods where many homes were sold.
  • There are substantial upfront costs associated with owning a home in San Francisco. This analysis assumes the purchaser has the funds to cover a 10% down payment, but in addition the purchaser may need to factor in closing costs, which may be upward of 3% of the purchase price,c and any repairs, back taxes, or other costs necessary prior to occupancy.
  • Property taxes are based on the assessed value of the home, which does not necessarily correspond to the sale price.
  • The range of over 30 special assessments and direct fees that may be included on a property tax bill were not included in this analysis.d These fees typically cost property owners an additional $300 to $1,600 in 2012.e

Data Source

American Community Survey (ACS), 5-year Estimates, 2007-2011.

Sale prices and locations of two bedroom apartments provided by the City & County of San Francisco Office of the Assessor Recorder, January 2013.

Map and table data are presented by planning neighborhood. Planning neighborhoods are larger geographic areas than census tracts. For income estimates based on ACS data, SFDPH chose to use the San Francisco Planning Department's census tract neighborhood assignments to calculate neighborhood values. This assignment method relies on a 'centroids within' methodology to convert census tracts to geographic mean center points. Census tracts are assigned to planning neighborhoods based on the spatial location of those geographic mean center points and neighborhood totals are calculated for the table. In a few case, certain census tracts were redesignated to different neighborhoods based on knowledge of the population dispersion in the tract.

Detailed information regarding census data, geographic units of analysis, their definitions, and their boundaries can be found at the following links:

Interactive boundaries map

http://sfindicatorproject.org/resources/data_map_method

  1. Franzini L, Spears W. Contributions of social context to inequalities in years of life lost to heart disease in Texas, USA. Soc Sci Med. 2003;57(10):1847-1861.

  2. Mayor’s Office on Housing. BMR Ownership Program Overview. Available at: http://sf-moh.org/index.aspx?page=268 last accessed 11 March 2013.

  3. Home Affordability Finance Calculator available at http://www.realtor.com/home-finance/financial-calculators/home-affordability-calculator.aspx?source=web

  4. For more information, visit the Office of the Treasurer and Tax Collector: http://www.sftreasurer.org/index.aspx?page=66#directchargespecassess

  5. Property taxes can be viewed by address or parcel number here: https://gate.link2gov.com/sfpropertytax/PropertySearch.aspx?TaxType=Secured