Most people want to own a home. The debate around buying vs renting is not really a debate for most people. Most people dream of owning their own homes, not only to secure their futures, but to have a place they can truly call their own, express their creativity with, and perhaps create a legacy for future generations.

Renting in San Francisco is expensive, with prices approaching, and at times, exceeding the prices of a mortgage — especially when you compare our prices to other regions around the country. Rents are north of $4,000 in San Francisco. If you grew up in other parts of the country, where rent is often half that, buying a home and investing that money in your future is compelling.

The average price of a typical two-bedroom house is five times the national average. According to Trulia, the average price of a Bay Area home is about $1.2 million. Prices like that make renting make something that many potential buyers must consider.

When making what might be the largest financial decision of your life, the question has to be, “Will the home keep its value and deliver an attractive return on investment?” In San Francisco, the historical answer to that question is an emphatic yes! Yes, San Francisco homes increase in value over time, even considering inevitable dips in the market.

Given that San Francisco real estate has historically delivered a generous return on investment, what should you consider before making a decision? Here are some things to think about.

For The Long Term, Buy

If you are only planning to be in the Bay Area for a couple of years and cannot afford to own more than one home, renting is a viable option for you.

If you are planning to live in the Bay Area permanently and can hold onto your home for at least five years, buying is an excellent option. You will more than likely build equity while you reap the other benefits of ownership such as customizing your home. You can also benefit from the tax advantages that come with being a homeowner.

In the short term, renting is more convenient and less risky than the alternative. Buying a home takes several months. If you are lucky, you can purchase one in a shorter period. Because San Francisco often has low housing inventory, it can take up to a year before you find and close on a home.

If you are holding out for less than $1 million deal, you might wait for longer. Getting your ideal home will demand extra effort and resources. Because buying a home in San Francisco can be so competitive, it helps to be prepared to be patient.

In a few days, at most weeks, you will have a rental space ready for you. There is very little waiting time. You can sometimes work with landlords to personalize your rental space, too. Many will allow you to, for example, paint your unit if you agree to paint it back to the original colors when you leave.

Price-To-Rent-Ratio Favors Renters

The current average price of buying and maintenance, including tax, insurance, and other obligations, is high. An average family unit will cost you at least $11,000 in monthly costs if you have a 20 percent down payment. Compare that with $4,000 in rental payments, a difference of $7,000 per month If you can find a good investment for that money, you may be able to exceed the return on investment of buying a home.

In practice, there is no guarantee that you will save the money. Buying a home will force you to save to create equity. Without it, you will have to shop around for ways to use the extra money while disciplining yourself to commit to investing.

When presented with buying vs renting in the Bay Area, the choice should be easy — buy. The issue is really, finding a home you love at a price that makes sense for you.

A single family home below the $1.5 million range often attracts multiple bids. An experienced real estate agent will help you determine the right budget for you and will also support you through the bidding process.

San Francisco enjoys a wide variety of neighborhoods. Work with your real estate agent to look at neighborhoods you may not have considered. You may find a gem! You will also want to carefully consider the amenities you would like. Perhaps a condo would work better for you if having concierge services matters to you.

Next Steps

Ultimately, buying vs renting is a personal decision. It’s important to understand your options and what the trade-offs might be. Consider buying a home in the San Francisco Bay Area a creative challenge. Work with a qualified, experienced real estate agent to make your dream home happen.

Thinking about buying or renting in San Francisco? Give Danielle Lazier + Associates a call. Whether you’re looking for urban homes in the heart of the city or a quiet, friendly neighborhood to take root, we’re ready to find you the perfect place to call home.

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