The Peninsula may be more affordable now than at the start of 2024

Buying a home on the Midpeninsula is more affordable now than at the start of 2024, according to newly released data from the California Association of Realtors. In the second half of the year, 17% of San Mateo households and 19% of Santa Clara county households could afford to purchase a median-priced home. That’s up from 16% and 17%, respectively, from the first half of the year, due in part to higher household incomes and a slight dip in mortgage rates in early fall, according to the report.

The two counties, however, continue to require the highest minimum qualifying income in the state to purchase a home. They are the only counties where the average homebuyer needs to earn more than $400,000 annually to afford a home.

In San Mateo County, the average homebuyer needs to earn $514,400 annually to afford a median-priced home of $2.05 million, and in Santa Clara County, the average homebuyer needs $476,800 to purchase a median-priced home of $1.9 million, according to the report. Statewide, the average homebuyer needs a minimum annual income of  $220,800 to qualify for the purchase of a median-priced home of $880,250.

Despite those record-breaking numbers, sales data shows that buyers are spending well-over the median price on homes here.

Monthly sales data from November, for example, shows the majority homes sold in Palo Alto were those with four or more bedrooms and a median selling price of $8.49 million. Assuming a 20% downpayment ($1.7 million) and an interest rate of 6.81%, the estimated monthly mortgage payment (on a 30-year fixed-rate mortgage) and taxes and insurance for these homes would be $54,084. In neighboring Menlo Park, the median price for similar-sized homes (which also represented the majority of sales in the city) was $5.15 million, with an average monthly mortgage payment of $32,796.

So just how much are homebuyers really spending on their new homes?

As part of our feature “What it Really Costs,” we’ve compiled monthly sales data from the California Association of Realtors into a series of maps to show how much the average buyer would need to spend for a one-bedroom, two-bedroom, three-bedroom and four-plus-bedroom home – along with estimated monthly mortgage fees – in the cities of Palo Alto, Mountain View, Los Altos, Redwood City, Menlo Park and East Palo Alto.

This story originally appeared in Palo Alto Weekly. Linda Taaffe is the Real Estate editor for Embarcadero Media.