The housing market in San Francisco has a notorious reputation.
It’s hard to find a place to live, it’s expensive, and it may or may not be driving out people that have lived there for years.
One chart from Bank of America Merrill Lynch’s Michelle Meyer perfectly encapsulates this struggle. Meyer highlights the skyrocketing rents of San Francisco, which have outpaced even the strong wage gains for people living in the city.
“Home prices in San Francisco have been on a wild ride, witnessing double-digit home price appreciation for several years during the bubble only to be reversed with a steep drop in the recession and then followed by another period of strong gains,” wrote Meyer in a note to clients.
If it is any relief, wage gains since the recession have been keeping up with the exploding price of a home somewhat better than in years past.
“We find that home prices are overvalued relative to personal income in San Francisco, but not nearly to the degree during the bubble period given strong gains in income,” said the BAML economist.
Thankfully, it does appear that there may be some relief on the horizon, according to Meyer, as supply has outpaced demand and home prices are “softening.” This is backed up by the S&P/Case-Shiller home price index, which showed that prices for San Francisco increased at their slowest pace since 2012 in June, growing 6.4%.
According to Meyer’s analysis San Francisco is bad, but not as bad as it once was.