How much income do you need to afford a San Francisco Home? Put it this way…it’s almost 50% more than is needed to buy a home in San Diego…the #2 competitor…according to HSH.com. That’s the highest salary needed for major metropolitan areas in the US…to afford a “median-priced home”.
So, you could say the San Francisco real estate market is bubbling over on it’s median priced home…at a cool $1.12 million.
Home builder Hovnanian announced Wednesday it would exit the market, calling it “frothy” and saying that prices for land were “lofty, almost speculative.”
Ara Hovnanian, the company’s CEO, also noted that the company was a “relatively small” player in the San Francisco market and the company wanted to refocus its efforts on other markets. Hovnanian HOV, -15.34% also announced it would pull out of Raleigh, Tampa, and Minneapolis.
The stock sank as much as 15% as investors digested the costs of those exits and Hovnanian’s pivot to focusing more on profitability and less on growth.
But it bears repeating that San Francisco home prices are surging. They’ve risen by double digits compared to a year ago for each of the last six months, according to S&P/Case-Shiller data, and have re-taken bubble-era highs.