San Francisco is the only major U.S. metro area where housing costs have returned to “normal”—and Bay Area neighbors Oakland and San Jose are not far off.
Redfin today published a report projecting hypothetical scenarios where U.S. housing costs will return to “normal” within the next ten years, using the mortgage payment-to-income ratio as the measurement.
We used July 2018 data to define “normal” because it was when the national median ratio had just reached 30%—a widely recognized benchmark for housing affordability. It was a moment in time well before the pandemic sent housing costs on a rollercoaster ride starting in 2020. In this analysis we compare costs using a 6.7% mortgage rate, an approximate representation of the past three months of rate activity.
San Francisco housing costs are back below 2018 levels
The analysis found that San Francisco’s mortgage payment-to-income ratio was 67.1% in July, seven percentage points lower than the 74.1% ratio in July 2018.
Redfin Senior Economist Asad Khan said it’s important to remember that while San Francisco has returned to below 2018 levels for housing costs, that doesn’t mean those costs are affordable for a household on the median income. He said the metro’s high mortgage payment-to-income ratio highlights that homes were being traded among a relatively concentrated share of high-wealth households. Households on the median wage in San Francisco are more likely to be spending a much lower share of their income to rent, or live in homes passed down through generations.
“It’s clearly not possible for the typical San Francisco household to devote nearly 70% of their income to housing,” Khan said. “San Francisco’s housing costs have remained elevated for well over a decade, and ownership opportunities are disproportionately going to high-income households. That dynamic helps explain why the metro has one of the lowest homeownership rates in the country and why affordability remains such a critical issue.”
Oakland on the brink of returning to normal housing costs
Oakland housing costs will return to normal this month if home prices are either flat or continuing to fall year over year and the mortgage rate remains at 6.7%. If prices grow 2%, housing costs will return to normal next month.
| Projected Timeline for Housing Costs to Return to “Normal”
The month when median mortgage payment-to-income ratio will return to July 2018 levels, based on different annual home sale price growth projections and using the current 6.7% mortgage rate |
||||||
| Metro | Current YoY Price Growth | Assumed Household Income Growth | Current Price Growth | -2% Price Growth | 0% Price Growth | 2% Price Growth |
| San Francisco | 1.4% | 7.7% | Already returned to normal | |||
| Oakland | -5.8% | 6.5% | Sep 2025 | Sep 2025 | Sep 2025 | Oct 2025 |
| San Jose | 3.2% | 6.5% | May 2029 | Feb 2027 | July 2027 | May 2028 |
| National | 1.4% | 3.9% | Dec 2034 | Aug 2029 | Sep 2031 | N/A |
Assuming the same 6.7% mortgage rate, San Jose housing costs will return to normal in May 2029 if home prices keep growing at the current rate of 3.2% annually. That’s still more than five years earlier than when national housing costs would return to normal under the same hypothetical scenario.
San Francisco home prices have only grown by 8% since July 2018, compared to 63% nationally
Part of the reason Bay Area metros have either returned to “normal,” pre-pandemic housing costs, or are relatively close to doing so, is because home prices had already spiked to very high levels by July 2018—and have not grown as fast as most of the country since then.
Home prices in San Francisco skyrocketed in the early 2010s as the Silicon Valley tech industry boomed in one of the most heavily regulated housing markets in the country, with the median price climbing 125% from $610,863 to $1,376,656 between January 2012 and July 2018. That was roughly twice as fast as the price growth nationally (63%) during the same period.
Since July 2018, however, the median home price in San Francisco has only risen 8% to $1,484,843. In comparison, the national median price jumped 56% during the same period.
Another reason housing costs are returning to 2018 levels in the Bay Area is because household incomes are growing considerably faster than the national average.
Our analysis projects that household incomes are growing at 7.7% annually in San Francisco, and 6.5% in both Oakland and San Jose. In comparison, we project 3.9% household income growth nationally.
“We live in a bit of a bubble,” said Ali Mafi, a Redfin Premier agent in San Francisco. “AI companies are setting up shop here—not just in Silicon Valley—and they’re offering unusually high salaries and big signing bonuses to attract talent. I’m seeing more young tech workers and couples moving in with the means to buy. With incomes rising and home prices holding steady, those buyers view the market as an opportunity for relative value.”
