$569K Income Needed for Median Priced Home in Silicon Valley and it doesn’t get you much…

Being Chased by the California Bear

California appears to be doing everything it can to drive the middle class out of the state. The ability to buy a home and raise a family is simply out of reach for most people. And for those fortunate enough to be able to buy, the value of the house you do buy isn’t something you would likely want to brag about.

“Just the Facts, Ma’am”

In Santa Clara County, the heart of Silicon Valley, the median home price is now $2.1M. Here is a home that recently sold for that price:

It’s a small house on a nice lot that was built in 1940. The minimum annual property tax for this house will be ~ $21K.

A 20% down payment of $420K will have had to have been made to avoid paying mortgage insurance premiums . This would leave the owners with a total mortgage amount of $1,680,000. Assuming a 7%, 30-year, fixed-rate mortgage, the monthly payments on this home would be about $13,594.

This equates to an annual housing payment of $163,128. Add electricity, water, trash pickup, internet, maintenance fees, etc., and one quickly realizes that it is out of reach of most families.

But people in Silicon Valley are rich, no?

The median household income for Santa Clara County, California, in 2024 is approximately $181,300. In the scenario shown, to qualify for a mortgage in this scenario, a household would need to earn $569,203 per year. The only way for most people to get into the housing market in Silicon Valley is to put down a huge down payment to lower monthly costs. And, in Silicon Valley, generally, the only way to do that is if you have been fortunate enough to work for a company that has had a successful IPO.

This is why the San Francisco Bay area has one of the longest commute times in the country. Many Bay Area workers commute as much as 90 minutes each day from the Central Valley to and from work because they cannot afford a home near their jobs. Three hours per day of absolute misery…

The straw that broke the camel’s back…

I lived in Silicon Valley for 30 years, the last 23 of which were in Los Gatos. Like everyone else we loved the weather, the beaches and the mountains. But the California I moved to in 1990 was not the California I left in 2021. And the only reason we stayed that long was because, in theory, we were in one of the better school districts in the state.

During COVID we learned that our son’s Spanish teacher was encouraging her students to use Google Translate. That did it. That was the end.

There is life after California

We moved to Boerne, TX just north of San Antonio. While not precisely the same, Boerne is roughly equivalent to Los Gatos, CA and Pleasanton, CA for reference purposes. It has a great downtown and really nice neighborhoods. We ended up getting a much nicer house, in a very nice neighborhood, almost twice the size (with a pool) for much less than half what we sold our house in Los Gatos for. Here’s the view we enjoy from our front porch while having our nightcap:

If you are able to work remotely, it’s time to leave.

If you are able to work remotely and you want to build a life with a future for your family, it’s time for you to leave the once-great state of California. Remember that $569,203 household income that would be required to buy that $2.1M house? Well, to add insult to injury, that income would place one squarely in the 11.3% California state income tax bracket .

In that same example, the household had to come up with a $420K down payment to avoid paying mortgage insurance. Look what that same $420K can get you in San Antonio:

It’s a brand new home on the burgeoning west side of San Antonio. And a 20% down payment on this home is $84K. With an FHA loan, the down payment could be as low as $15K.?

The school systems are excellent. The food scene is great. And there are tons of activities available for virtually every age group. And San Antonio people are among the most hospitable people you’ll meet anywhere.

When the cost far exceeds the value

At some point it is going to occur to you that the costs of living in California far exceed the value you receive from being there. We all love the California that once was, but even if the political climate changed tomorrow, it will be at least a generation, if ever, before California regains its golden glow.

When you’ve had enough of the nonsense in California, get in touch with me; I’d be honored to help you make a better life for you and your family.

If you found this article helpful, please share it. If you would like me to help you plan your escape, contact me at either:

[email protected] or 408.827.8484

Note: The Hill Country Homestead Group is brokered by Texas Providence Real Estate.

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