Affordable Housing in High Cost Areas: An Introduction

Authors

Carolina Reid, Federal Reserve Bank of San Francisco

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September 1, 2005

It was the buzz of the weekly neighborhood cocktail party. A house down the street—1,200 square feet,
with 2 bedrooms and one bath—sold for just over $900,000. It was on the market for two days. While the
homeowners on our block happily toasted the Bay Area’s red hot housing market (and their growing wealth), the renters among us contemplated our fate with less exuberance. With every record increase in house values, the dream of owning a home slips further away. How is it possible that even with two incomes, we can’t afford to buy a house in a neighborhood with a good elementary school and a safe playground nearby?