Housing Affordability Crisis: Typical Homebuyers in Los Angeles, San Francisco, and San Diego Spend Up to 78% of Income on Housing

The housing market in Los Angeles, San Francisco, and San Diego has reached a critical juncture, with typical homebuyers spending up to 78% of their income on housing. This alarming trend highlights the affordability crisis gripping these regions, as high demand, limited supply, and elevated prices continue to squeeze households.

In Los Angeles, only 16% of households could afford to purchase the $880,250 median-priced home in the third quarter of 2024 (CAR, 2024). A minimum annual income of $220,800 was needed to make monthly payments of $5,520, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 6.63% interest rate (CAR, 2024). The high cost of housing has led to a shortage of affordable housing, with only 9% of new units added since 2010 being affordable to households earning less than the area median income (MGI, 2016). This has resulted in 70% of households in the City of Los Angeles having to stretch financially to obtain a standard-size unit in their current neighborhood (MGI, 2016).

In San Francisco, only 15% of households could afford to purchase the $874,290 median-priced home in the fourth quarter of 2024 (C.A.R., 2025). A minimum annual income of $222,000 was needed to make monthly payments of $5,550, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 6.76% interest rate (C.A.R., 2025). The high cost of housing has led to an exodus of residents, with over 800,000 Californians leaving the state between 2021 and 2022 (Census Bureau, 2022). Teresa, a 52-year-old healthcare worker, found it impossible to afford to buy again after separating from her husband, despite selling their Encinitas home for a profit (San Diego Union-Tribune, 2025).

In San Diego, only 12% of households could afford to buy the $1.01 million median-priced home in the third quarter of 2024 (CAR, 2024). A minimum annual income of $253,600 was needed to make monthly payments of $6,340, including principal, interest, and taxes on a 30-year fixed-rate mortgage at a 6.63% interest rate (CAR, 2024). The high cost of housing has led to a shortage of affordable housing, with only 16,000 households receiving help to pay their rent through the federal Section 8 Housing Choice Voucher rental assistance program administered by the San Diego Housing Commission (SDHC, 2025). Sergio Castro-Gutierrez, a 36-year-old chef, found it impossible to qualify for an apartment in North County, despite working 50-hour weeks, due to the high cost of housing (San Diego Union-Tribune, 2025). Mishele Stead, a 54-year-old housing navigator, is terrified of being forced from her Golden Hill home so developers can build luxury apartments, as she cannot afford to rent elsewhere (San Diego Union-Tribune, 2025).

The primary factors contributing to the elevated housing prices in these cities are high demand and limited supply, land use restrictions, high construction costs, and elevated mortgage rates. These factors have led to a shortage of affordable housing, an exodus of residents, and financial strain for many households in these regions.

Local and state policies, such as Proposition HHH in Los Angeles and the Housing Affordability Strategies in San Francisco, aim to address the housing affordability crisis by increasing the supply of affordable housing, streamlining the development process, and providing support for vulnerable residents. However, the specific approaches and funding mechanisms differ between the two regions.

As the housing market continues to evolve, it is crucial for policymakers, investors, and homebuyers to stay informed about the trends and challenges facing these regions. By understanding the factors contributing to the elevated housing prices and the policies aimed at addressing the affordability crisis, stakeholders can make more informed decisions and work together to create a more sustainable and equitable housing market.