How a Billboard Exposed the Insanity of the San Francisco Housing Market

April 9, 2016, 1:00 PM UTC
Existing Homes For Sale As Prices in 20 U.S. Cities Rise At A Faster Pace
A "For Sale" sign stands in front of a home in San Francisco, California, U.S., on Tuesday, Dec. 29, 2015. Home values in 20 U.S. cities rose at a faster pace in the year ended October as lean inventories of available properties combined with steadily improving demand. Photographer: David Paul Morris/Bloomberg via Getty Images
Photography by Bloomberg Bloomberg via Getty Images

On Monday, San Francisco Examiner reporter Joe Fitzgerald Rodriguez was canvassing around town when he spotted a billboard touting an upcoming batch of townhouses.

One particular adjective stood out to him. So he took a picture, posted it on Twitter, and in one fell swoop, gave yet another piece of evidence that the San Francisco housing market has truly nowhere to go but up.

The use of the description “low $1,000,000s” scored a host of feedback on social media and Reddit, each remarking that this was yet again a display of local prices gone mad.

The billboard joins a string of stories recently—from a man paying $508 monthly to live in a wooden box, to a $350,000 listing price for a wooden shack—that have become exhibits for increasingly unaffordable homes in San Francisco, where the median home price has moved to around $1.1 million.

To put that into perspective, the California Association of Realtors puts out a Housing Affordability Index every quarter to see how many households can afford the median price for a house in the neighborhood. In San Francisco, only 11% of its own residents can afford to pay for the average home there. For perspective, the percentage for the state of California is around 30%, and for the whole country, it’s 58%.

So, you could say the ad was right: $1,000,000 is low-ish for a home. The billboard publicized Summit 800, a housing development of 182 three-bedroom townhouses at Summit Way. While the residences differ in size and price, the billboard is probably referencing its Residence A1 townhouses, its smallest house at 1,547-square-feet.

Summit 800 San Francisco Homes
Summit 800 townhouses in San Francisco. Courtesy of Comstock Homes.
Courtesy of Comstock Homes.
San Francisco Billboard 2016
Summit 800 townhouses in San Francisco. Courtesy of Comstock Homes.
Courtesy of Comstock Homes

The developers of Summit 800, Comstock Homes, said that their billboard has received a lot of attention, and somewhat unfairly. “It’s not uncommon to see ‘ from the low’ in terms of pricing,” Sandra Eaton, director of sales and marketing for Northern California at Comstock Homes, told Fortune. “They [families] are growing out of the condo market, which can be priced as high as $1,500 per square foot, whereas our community is more in the range of $650… It would not be difficult to find similar advertising in our city.”

Eaton cautions, however, that while the influx of tech-based workers and a robust economy has been blamed for driving up prices over the years—San Francisco, for instance, has added 480,000 private-sector jobs and only around 50,000 housing units over the last five years—it’s a problem everywhere in the U.S. “People who see the billboard are frustrated, and it’s understandable. It’s happening not just in San Francisco, it’s everywhere. San Francisco just happens to be the epicenter of the Bay Area, and it reverberates out from here.”

“It’s very normally to start selling [these homes] for as low as say $995,000, and see it sell for as high as $1.5 million [with a bidding war]. I don’t think they [Comstock Homes] are trying to trick people,” said Stuart Gavan, a San Francisco-based agent for real estate site Redfin. “I didn’t see anything wrong with the billboard advertising these homes starting in the low $1,000,000’s when it is their true market value.”

Gavan said that high prices are also growing in tandem with the average household income for San Francisco, which has been pegged at around $83,000, up by nearly 10% over the last three years. But with property prices estimated at nearly nine times that of household income, a proportion that is reportedly the highest in the nation, San Francisco is in danger of becoming a city in which only the most affluent can live.

Until a solution comes up—one is for inventory of homes to go up to meet the demand, and Gavan says that there are signs that this has been the case recently—billboards like the above could become commonplace. “We all would like lower prices on our real estate,” said Eaton. “However, land is more costly, it’s not just one thing, it’s a combination of many factors that contributes to these prices.”