California has unveiled its 2023 State Income Limits, demonstrating the widening income inequality gap in the state and putting further emphasis on the high cost of living in cities like San Francisco and San Jose. According to the updated guidelines, a single person earning less than $122,500 in San Francisco County and $126,900 in Santa Clara County (San Jose) is now considered to have low income.

(hcd.ca.gov)

The Department of Housing and Community Development (HCD)'s latest income limits, which take into account factors like median income data, household income levels, and affordable housing calculations, highlight the growing affordability crisis in Silicon Valley and other Californian cities. These income limits are designed to determine applicant eligibility and calculate affordable housing costs for various housing assistance programs, with several cities in the state witnessing their very low-income limits not equaling 50% of the area median income (AMI).

As the 2023 State Income Limits show, various exceptions and adjustments have been made to the calculations of income limits, such as accounting for high housing costs in relation to income, ensuring that income limits and AMI don't fall below levels achieved in prior years, and holding State Income Limits harmless from any decreases. These new income limits carry significant consequences for the availability of affordable housing, access to housing assistance programs, and housing policy development.

In calculating the latest income limits, HCD used the median family income (MFI) data from the 2021 American Community Survey (ACS) to estimate FY 2023 income limits for all areas of California. Median family income estimates are calculated by using the Section 8 program's Fair Market Rent (FMR) area definitions to determine median income levels for each metropolitan area, specific metropolitan areas' parts, and each non-metropolitan county. The income limits are further adjusted based on family size and constraints that HUD sometimes imposes on the very low-income limit calculations, highlighting significant income disparities between families of different sizes and those living in areas with different housing-cost-to-income relationships, as HUD's FY 2023 Income Limits Methodology Document demonstrates.

While this data can help inform policy decisions and housing assistance programs, it's worth noting that there is a time lag between data collection and availability. The 2023 State Income Limits, for example, rely on 2017-2021 ACS data, meaning more current trends in median family income levels might not be reflected. However, the figures serve as a stark reminder of the growing income inequalities in California and the challenges faced by those looking to secure affordable housing in high-cost areas like San Francisco and San Jose.