Bay Area Housing Market Affordability Update for Early 2022

Housing affordability in some Bay Area counties improved during the fourth quarter of 2021. Alameda, Contra Costa, Marin and Napa counties all had an increase in housing market affordability from the previous quarter, according to a February 2022 report. The other five Bay Area counties were unchanged.

As of early 2022, San Mateo County is the least affordable real estate market in the region. At the other end of the spectrum, Solano County is still the most affordable Bay Area housing market for home buyers.

Home prices are expected to continue climbing in most cities across the area, as we move further into 2022. And the market should remain competitive due to low supply levels.

Bay Area Housing Market Affordability Update

Earlier today, the California Association of REALTORS® (C.A.R.) published an updated housing market report with data for the state as a whole, along with all counties and regions.

According to that report, slowing home-price growth and rising incomes have improved housing affordability for California as a whole, along with some Bay Area counties. This is good news, especially for home buyers with more limited budgets.

To quote the February 2022 C.A.R. report:

“A tempering of home price growth combined with a solid increase in household incomes improved the affordability outlook for Californians in the fourth quarter of 2021…”

But here in the San Francisco Bay Area region, housing market affordability improved in only four out of nine counties. During the last quarter of 2021, housing became more affordable in Alameda, Contra Costa, Marin and Napa counties. In the other five counties (San Francisco, San Mateo, Santa Clara, Solano and Sonoma), the affordability level was unchanged from the previous quarter.

Most and Least Affordable Markets in Early 2022

San Mateo remains the most expensive county in the Bay Area, when measured by the median home price. According to the C.A.R. report, only 19% of households are able to purchase a median-priced home in that county. The median house price for San Mateo County rose above $2 million dollars last year, leaving a lot of would-be home buyers out in the cold.

Solano County sits at the other end of the pricing spectrum. During the fourth quarter of last year, 42% of households in that county could afford the $585,000 median-priced home. That makes Solano the most affordable housing market in the broader Bay Area region, something we’ve reported in the past.

Median Home Prices & Typical Monthly Payments

The table below was adapted from the February 2022 C.A.R. report mentioned above. It shows the median home price for all nine Bay Area counties, at the end of last year. It also shows what a typical monthly payment might look like, at least for home buyers who choose to put 20% down.

* The monthly payments shown above included “taxes and insurance on a 30-year, fixed-rate loan … assuming a 20 percent down payment and an effective composite interest rate of 3.28 percent.” Your monthly payment could look very different, depending on the amount you put down and other factors.

Related: Typical down payments in our area

You can see why Solano County has the most housing market affordability within the broader Bay Area. Home prices are much lower there, when compared to the region as a whole. There’s also a smaller “gap” between median house prices and average incomes in the area.

You can also see why San Mateo has a much lower housing affordability level. While incomes in that county tend to be higher, they don’t make up for the whopping $2,100,000 median home price. In short, it’s harder for home buyers to afford a purchase in San Mateo, when compared to the other Bay Area counties.

What Can Buyers Expect in 2022?

The inventory situation remains tight all across the Bay Area real estate market. That has been the case for many months now, and it looks like 2022 will bring more of the same.

But there might be some good news for buyers. Numerous housing reports and forecasts published in recent weeks have suggested that the overall pace of home sales could ease up a bit. So things might not be so heated in 2022, compared to last year.

According to a January 2022 report from Zillow, the typical number of days it takes to sell a house has risen steadily since last summer. In June of 2021, the typical U.S. home spent just one week on the market before going under contract. Last month, that metric had risen to 13 days.

Overall, however, the Bay Area housing market will probably continue to favor sellers over buyers in 2022, due to tight inventory conditions.