Buy or Rent in San Francisco

Is it better to buy or rent in San Francisco?

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The better deal in the long run depends on how long your run is

Patricia Chang

San Francisco has always been a renter’s city. Even in recent years, when soaring real estate prices have increased the incentive to buy, the SF Planning Department estimates that nearly 65 percent of San Franciscans rent.

The question for a newcomer arriving to the city after both home prices and rents ran away with the bank in recent years is: What makes more economic sense these days, renting or buying?

That depends. In the short term, renting is always more affordable—otherwise why would anyone do it?—but after a certain number of years the returns diminish.

How long that takes depends on a lot of predictions—or assumptions. In 2018, an increasing number of economic prognosticators suggest that SF is in a weird season when renters are actually getting the longer end of the stick.

Here’s the breakdown:

  • In July, real estate site Trulia declared that, for the first time since it began evaluating the relative merits of renting versus buying, renting had finally become the more affordable option in both San Francisco and San Jose. Trulia economist Cheryl Young wrote that “escalating prices are driving homes further out of reach” during a time when rent price stayed relatively flat. Young’s study assumed that households stayed in the same place for at least seven years and that homebuyers went in for a 30-year fixed mortgage.

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