US: San Jose Home Prices Surpass $2 Million

The median home price in San Jose exceeds $2 million, highlighting the ongoing affordability crisis in U.S. metropolitan areas.

In a historic turn of events, the median home price in San Jose has soared past the $2 million mark in the second quarter, marking a first for any metropolitan area in the United States. This milestone not only highlights the escalating costs of housing but also underscores the ongoing affordability crisis that plagues the nation. According to the National Association of Realtors (NAR), the prices for existing single-family homes in the San Jose-Sunnyvale-Santa Clara region surged by 11.6% compared to the same quarter last year, reaching an eye-watering $2.08 million.

US: San Jose Home Prices Surpass $2 Million - A New Record

San Francisco, not one to be left behind, claimed the second spot on the list of most expensive metro areas, with its median home price climbing 8.5% over the past year to approximately $1.45 million. It’s worth noting that seven of the top ten priciest markets in the country are nestled in California, a state that seems to have a penchant for sky-high real estate prices. This steep appreciation in home values reflects a broader, more troubling issue of affordability that is becoming increasingly difficult to ignore.

On a national scale, the annual growth rate for existing single-family homes rose by 4.9%, bringing the median price to $422,100 in the second quarter. Interestingly, a staggering 89% of metropolitan areas across the country experienced home-price increases during this period. Meanwhile, the interest rate on a 30-year fixed mortgage fluctuated between 6.82% and 7.22%, leaving many potential buyers feeling like they’re caught between a rock and a hard place.

In nearly half of U.S. real estate markets, an income of at least $100,000 is now necessary to secure a mortgage with a 10% down payment, a significant jump from 40.7% in the first quarter. The typical mortgage payment has also seen an uptick, now averaging $2,262 a month—an 11% increase from the previous quarter. Families are now dedicating 26.5% of their income to mortgage payments, up from 24.2% just three months prior.

Surprisingly, some unexpected markets topped the NAR’s list for the largest annual percentage increases. Racine, Wisconsin, and Glens Falls, New York, both experienced a remarkable 19.8% year-over-year growth in home prices during the second quarter. However, the NAR cautioned that the mix of homes sold can significantly influence these figures.

Conversely, price growth has moderated in certain U.S. real estate markets that previously saw rapid increases. In Austin, home prices remained flat in the second quarter, while Nashville mirrored the national median home-price gain of 4.9%. Meanwhile, the New York-Jersey City-White Plains area reported a 14.8% increase from a year earlier, with median prices nearing $699,000.

As the US real estate market continues to evolve, one thing remains clear: the quest for affordable housing is far from over, and potential buyers may need to brace themselves for the rollercoaster ride that lies ahead.