|
Getting your Trinity Audio player ready...
|
A household now needs to earn more than $500,000 annually to afford a typical home in the San Jose metro area, according to a new national housing affordability analysis that again ranked the South Bay as the most expensive housing market in the country.
The report by ConsumerAffairs found that buyers in the San Jose–Sunnyvale–Santa Clara metropolitan area need an annual income of $501,012 to purchase a typical home with a 10% down payment while keeping monthly housing costs within the commonly recommended 28% threshold of gross income.
The San Jose metro area, which encompasses all of Santa Clara and San Benito counties, includes the Midpeninsula cities of Palo Alto, Mountain View, Los Altos and Los Altos Hills.
The South Bay topped the rankings by a wide margin. The San Francisco metro area, which includes San Francisco, San Mateo, Alameda, Contra Costa, and Marin counties, ranked second with a required annual income of $358,090, followed by the Santa Cruz metro area at $354,973.
The findings highlight the continuing affordability crisis across California, which accounted for nine of the nation’s 10 most income-restrictive housing markets for the second consecutive year. The only non-California metro in the top 10 was Honolulu, Hawaii.
Income needed to buy a home on the Peninsula
| Median sales price | Monthly payments | Required income | |
| Los Altos | $4,848,333 | $37,398 | $1,602,771 |
| Mountain View | $1,720,000 | $13,318 | $570,771 |
| Palo Alto | $3,016,833 | $23,300 | $998,571 |
| Atherton | $7,890,841 | $60,817 | $2,606,442 |
| East Palo Alto | $1,124,000 | $8,730 | $374,142 |
| Redwood City | $1,900,000 | $14,704 | $630,171 |
Midpeninsula housing costs
Locally, the pressure point is even more visible when the data is broken down within the Midpeninsula, where in most communities median home prices are well above $2 million. Using Zillow mortgage estimates, which incorporate a 10% down payment, current mortgage rates, taxes and insurance, monthly payments on these homes far exceed what typical incomes in the region can support under the 28% affordability rule.
Based on February housing values, Palo Alto, with a median home sale price of approximately $3 million, carries a typical monthly mortgage payment of about $23,000. Under the 28% affordability rule used in the analysis, that translates to an annual income requirement of approximately $999,000 — pushing the city close to the million-dollar-income threshold.
Mountain View, with a median home price of about $1.7 million, has monthly payments averaging about $13,300, requiring roughly $570,800 in annual income to afford a typical home.
Los Altos sits in a category of its own. With a median sale price hovering around $4.8 million, monthly payments rise to about $37,400, translating to an annual income requirement of approximately $1.6 million — the highest among the three cities.
Midpeninsula communities in the San Francisco metro area, which includes San Mateo County, also exceed regional affordability thresholds. In Atherton, where the median sale price is about $7.9 million, the annual income requirement reaches roughly $2.6 million. Redwood City would require a salary of over $630,000, while East Palo Alto would require about $374,000.
Housing costs nationwide
Across the country, income requirements to buy a home have risen sharply in recent years. Households now need to earn $120,796 annually to afford a typical home, according to the analysis — a 48% gap above the U.S. median household income of $81,604.
Researchers found that the income needed to buy a home nationwide has increased 82.8% since 2020, when households needed less than $70,000 annually to afford a typical home.
The report attributes affordability pressures to a combination of rising demand and limited supply.
While affordability has improved modestly over the past year as home prices softened slightly, researchers said it remains far below historical norms. The report noted that 2015 was the last year when the median U.S. household income was sufficient to afford a typical home under the 28% affordability guideline.
The gap between high-cost and low-cost markets remains stark. In Huntington, West Virginia — ranked the nation’s most affordable metro — buyers need to earn just $53,650 annually to afford a typical home. Huntington is one of only four metro areas nationwide where affordability thresholds fall below local median household incomes. The other cities include Flint, Michigan; Davenport, Iowa; and Peoria, Illinois.
Methodology: The analysis used Zillow monthly housing payment estimates from February 2026 for the nation’s 200 largest metro areas. Researchers calculated the annual income needed to keep housing payments at or below 28% of gross monthly income, assuming a 10% down payment. All figures are approximate, based on model assumptions.
