House poor with a high income.

January is flying by!

Last musing, we brought up the concept of being house poor. This week, we’re looking at how even very high income earners can feel trapped without options in the Bay Area housing market.

Basically, the idea is that high earning Bay Area homeowners feel trapped due to both extreme housing scarcity and rapidly increasing prices that outpace even really high incomes. Also, high interest rates, insurance, and property taxes trap even luxury homeowners in the space of feeling house poor.

The Bay Area’s high income tech industry has resulted in an ultra-competitive luxury home market, and housing prices on the most desirable, fanciest properties have gone up at a higher rate than incomes have. So even with a six-figure salary, many Bay Area homeowners are unable to upgrade into more desirable areas.

Both interest rates and taxes have increased for homeowners, and this makes people’s monthly mortgage a heavy burden to shoulder.

Then there’s the issue of housing shortage. The Bay Area has not built enough housing to keep up with demand for decades. This is especially true in the middle income market.

A lot of successful luxury buyers around here have an inherited wealth advantage. Having inherited wealth, either property itself or a large down payment, is an unfair advantage in the luxury market.

Competition from existing wealth combined with the sheer scale of the housing crisis is keeping high earners financially stuck and unable to make upgrades on their existing house or feel like they could afford a nicer place.

The cost of moving up has simply overwhelmed high earners. A household earning $250,000 may struggle to justify trading in a $1.5 million home for a slightly better one when it means taking on $3,000 more monthly on their mortgage payment due to interest rate differences.

Lots of people who bought years ago have a 2% or 3% interest rate, but buying now you’d be looking at more like 6% or higher.

I’ve read recently that property tax in California is being referred to as the “golden handcuffs.” California’s 50-year-old property tax law, Prop 13, is a big deterrent to moving. If you sell and buy a new property in the same region, it triggers a tax reassessment to fair market value, which runs the risk of doubling or tripling your property tax bill. That’s brutal!

The reality is, even if you make a lot of money, a lot isn’t enough. In 2026, to afford a median-priced home in San Mateo County, you need to make $524,000 a year, and over $400,000 in San Francisco. I mean, that’s really raising the bar on the title “high income earners.”

So you can see the weird pigeonhole people find themselves in. It’s a strange predicament to find yourself earning $300,000 a year and being unable to afford to move out of your starter home. It’s another very imperfect dynamic playing out in California’s housing market, where something has got to give.

I mean, you work your booty off with the goal of being able to move up in the world. How frustrating is it to find yourself stuck?

It can’t stay like this forever, though. The ebb and flow continues, finances fluctuate, the market changes — there’s always some give eventually.