More than half the homes currently on the market in San Diego and six other major American metropolitan areas are currently unaffordable for local residents, according to a new analysis by the online real estate firm Zillow.

For sale signs in California. Photo from Wikimedia Commons.

Homebuyers looking for affordable properties may increasingly be forced to search on the perimeter of the country’s largest metro markets, Zillow said, as closer properties become out of reach for buyers of typical means.

Zillow determined affordability by analyzing the current percentage of each metro area’s median income needed to afford the monthly mortgage payment on a median-priced home, and comparing it to the share of income needed to afford a median-priced home in the pre-bubble years between 1985 and 2000.

If the share of monthly income currently needed to afford the median-priced home is greater than it was during the pre-bubble years, that home is considered unaffordable for typical buyers.

Among the 35 largest metro areas nationwide, more than half of homes currently listed for sale in these seven communities were considered unaffordable by historical standards:

  • Miami  — 62.4 percent
  • Los Angeles  — 57.2 percent
  • San Diego  — 55.3 percent
  • San Francisco  — 55.2 percent
  • Denver  — 52.8 percent
  • San Jose  — 50.9 percent
  • Portland, Ore.  — 50.3 percent

Nationwide, just one-third of homes, or 33.6 percent, are currently unaffordable, and in many metro areas, the majority of homes remain more affordable now than they have been historically for buyers making the area’s median income.

“As affordability worsens, we’re already beginning to see more of the kinds of worrisome trends we saw en masse during the years leading up to the housing crash. These include a greater reliance on non-traditional home financing, smaller down payments and a greater pressure to move further away from urban job centers in order to find affordable housing options,” said Zillow Chief Economist Dr. Stan Humphries.

“We’re not in a bubble yet, but we’re beginning to see the early signs of one in some areas.”

— From a Zillow press release

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Chris Jennewein

Chris Jennewein is Editor & Publisher of Times of San Diego.