What's the Cost of Living in San Francisco?

Known for its rolling hills, frequent fog and iconic sites like the Golden Gate Bridge and Alcatraz, San Francisco is a popular vacation destination, movie setting and dream hometown for people looking to make a career change.

But San Francisco is also known for being notoriously expensive. As you can tell from the Painted Ladies row houses in the “Full House” opening credits and the luxury condominiums that have sprung up around the metro area in recent years, San Francisco’s cost of living is not for the faint of heart – or light of wallet.

Here’s what you need to know about what it takes to afford living in San Francisco.

The True Cost of Living in San Francisco

In U.S. News’ 2019 Best Places to Live rankings, San Francisco takes the No. 7 spot. The biggest factors contributing to its high rank on the list are its strong job market and its reputation as a desirable place to live. In a survey of 2,000 U.S. residents administered by SurveyMonkey to determine the desirability of the 125 metro areas on the Best Places to Live list, San Francisco tied for first with three other places: Honolulu, Colorado Springs, Colorado, and Portland, Oregon.

Based on data from the U.S. Census Bureau, the median annual household income for the San Francisco metro area is $98,363, while the median household income of the 125 most populous metro areas in the U.S. is $60,958. San Francisco's median annual housing cost is $26,534, factoring in the median mortgage, utilities and property tax payments over the course of a year for homeowners in the metro area as well as the median gross rent for 12 months for the share of the population made up of renters.

Based on these calculations, the cost of living in the San Francisco metro area requires 26.72% of the median household income. Out of the 125 most populous metro areas in the U.S., San Francisco is the 15th-most expensive place to live.

Home Prices in San Francisco

In August, the median sale price of houses in San Francisco was $1.59 million, according to real estate brokerage Compass in its September 2019 San Francisco market report. While other parts of the Bay Area are seeing median home prices decline, San Francisco's sustained price growth shows continued interest and residents' investment in the city, according to the report.

Patrick Carlisle, chief market analyst for Compass for the San Francisco Bay Area, explains that while the highest-priced luxury homes have stabilized in price in recent years, the homes that were more affordable back in 2012, when the housing market started its recovery from the recession, continue to climb. As a result, the city saw a new peak median monthly home price in June, at $1.75 million (The decline from $1.75 million in June to $1.59 million in August is a relatively small change that is affected by seasonal factors.)

“In the last few years there has just been a desperate search for more affordable homes in the San Francisco Bay Area,” Carlisle says.

Affording a Home in San Francisco

The biggest obstacle to homeownership for San Francisco-area residents is the same as in many parts of the country: the ability to save for a down payment. Without that, residents remain renters, which is also costly and may prevent them from being able to save.

“They have the salaries to support the monthly payment, but they don’t have the down payment,” says Vendy Chan, a real estate agent and marketing and education manager for Century 21 MM San Francisco Bay Area.

Chan recalls a family she helped to buy a home recently. Living in the home were two parents, their two children and two grandparents, with a total household income around $100,000 per year – right around the median income for the San Francisco metro area, based on U.S. Census Bureau data. But because of the high cost of housing, the family of six had been living in a two-bedroom condo because they didn’t have the savings for a down payment.

Chan says she was able to help the family find down payment assistance and purchase a four-bedroom house, giving the high school-age children their own bedrooms for the first time.

Chan says many people are unaware of the options available to help with down payments, cover closing costs or even reduce interest rates. “It’s not only a housing issue, but a socioeconomic issue,” Chan says.

Other Costs for Living in San Francisco

As with any major city, expect additional living costs to add up as well. Residents can expect to pay more for parking, dining out and entertainment in a major city like San Francisco.

General sales tax in San Francisco is 8.5%, according to tax information company Avalara, which is higher than common basic sales tax rates of 6%, but well below others. Chicago, for example, carries a sales tax rate of 10.25%, while New Orleans has a combined local sales tax rate of 9.45%. A fellow Bay Area city, San Jose, has a total sales tax of 9.25%.

While costs for things like retail items and entertainment can become prohibitive – especially if you’re trying to regularly put money in savings – Carlisle says the cost of housing is the biggest issue when it comes to affording the San Francisco life.

How to Afford San Francisco

While living in the Bay Area is a lot easier when you make $150,000 or more a year, Chan says it’s possible to live well on less – and people clearly do it, recalling the family she helped buy a home previously.

Of course, compromises must be made. If you’re looking to become a homeowner for the first time, make sure your expectations are in check – a lower budget means your commute may be longer.

“The trade-off will be the size of their home, the affluence of their neighborhood and how far they’re willing to commute,” Carlisle says.

Rather than living in downtown San Francisco, both Chan and Carlisle point to other places in the metro area, on the other side of the San Francisco Bay – Oakland and Hayward, for example – that offer a much cheaper cost of living.

Additionally, the home you buy may be smaller than you originally envisioned, which may make it possible to live within the city limits. Carlisle says condos make up a significant portion of the market in San Francisco, and they're becoming increasingly popular in surrounding areas like Oakland and other parts of the East Bay.

A one-bedroom condo can be found for between $900,000 and $1 million in some neighborhoods. "It's ridiculous that we think of that as being less expensive, but that's the way it is," he says. The spots to consider for a smaller home at a more affordable price include the southeastern and central to west neighborhoods, including Bayview, Portola, Sunset and Parkside.

“Instead of a two-bedroom, you might want to start with a one-bedroom,” Chan says. Even if the first home you purchase isn’t ideal in size or location, your wealth will increase as you make mortgage payments and as property values rise. Eventually, buying a bigger home or one closer to work may be within reach.