The Stark Reality of Silicon Valley’s Housing Market

-The median price for a house in Santa Clara County California is $1,868,000

-The minimum annual household income required to qualify for it with 20% down is $497,276

-The median annual household income in Silicon Valley County California is $184,300

Introduction

Silicon Valley, renowned for its technological innovation and economic prowess, has long been a beacon of opportunity. However, its housing market presents a sobering reality for many of its residents. A recent property sale in Santa Clara County, the heart of Silicon Valley, underscores the significant challenges faced by potential homebuyers, particularly those with median household incomes.

The Case Study: 1008 Curtner Avenue, San Jose

In August of 2024, this San Jose, CA, 1196 square foot house with 3 bedrooms and 1 bathroom, on a 5227 square foot lot, sold for $1,350,000.

The subject property, located at 1008 Curtner Avenue in San Jose, is a modest 1,196 square foot home on a small 5,227 square foot lot. With three bedrooms and one bathroom, it is far from the epitome of luxury. Yet, this unassuming property sold for a staggering $1,350,000 in August 2024. For many, the price tag alone may seem prohibitive, but the financial commitment required to secure such a home is where the true weight of the situation becomes clear.

With a 20% down payment of $270,000, the buyer secured a 30-year fixed-rate mortgage for $1,080,000 at an interest rate of 6.37%. This translates to a monthly payment of $6,734.26 for principal and interest alone. When adding in property taxes and homeowner’s insurance, the total monthly housing cost rises to $8,365.51. To qualify for this mortgage, a household would need to earn at least $233,428.20 annually, a figure far beyond the reach of most residents.

The Median Home Dilemma

The challenges highlighted by the Curtner Avenue property are not unique. They are, in fact, emblematic of the broader housing market in Santa Clara County. The median price of a home in this area currently stands at $1,868,000. To afford such a home, a household would require an income of nearly $500,000 per year—a stark contrast to the county’s median household income of $184,300.

Even with a 20% down payment, a mortgage on a median-priced home would result in monthly payments exceeding $11,600. This figure includes $9,318.23 for principal and interest, $1,868 for property taxes, and $416.67 for homeowner’s insurance. For a household earning the median income, the highest mortgage they could qualify for is approximately $646,373. This would enable them to purchase a home valued at roughly $807,966—only 43% of the cost of a median-priced home in the county.

A Grim Outlook for Average Earners

More than 3,500,000 people left California between 2018 and 2023. Many of these left the San Francisco Bay area. Many left because buying a decent home and raising a family is no longer affordable.

The implications of these figures are profound. A household earning the median income in Santa Clara County can afford a home that is less than half the median price. This reality suggests that the majority of residents are effectively priced out of the market. The dream of homeownership in Silicon Valley, once attainable, is now increasingly out of reach for more than half of the households living there.

This situation is not merely a statistic; it is a reflection of a growing disparity between income levels and housing costs. The sale of modest properties like 1008 Curtner Avenue for over a million dollars highlights the disconnect between market prices and the financial realities faced by the average resident. As Silicon Valley continues to thrive economically, its housing market becomes ever more exclusionary, raising pressing questions about the future of this iconic region.

Too Expensive to Stay

In conclusion, the housing market in Silicon Valley, particularly in Santa Clara County, has reached a point where it is inaccessible to many of its own residents. With home prices soaring and income levels not keeping pace, the dream of owning a home in this area is fading for a significant portion of the population. This growing divide poses a serious challenge to the long-term sustainability and inclusivity of the region’s economy and community.