San Francisco Real Estate - Residential

Renting versus buying San Francisco real estate

A reader asks:

I saw a letter to the editor in last Sunday's San Francisco Chronicle making the claim that renting makes more sense than buying right now because of the state of the market and think that Realtors who say otherwise are doing their clients a disservice. What is your opinion on this?

Our reply:

We saw that letter on SFGate, discussed it and do not see the wisdom of this approach. The person who submitted the letter ran the numbers through the rent-versus-buy calculator and it showed that, "in the Bay Area at least, one can build up equity more quickly by renting and disciplined saving than from buying." We want to know how that happens?

Think about it. First of all, who do you know that is aggressively saving? And why? And what is the current interest rate on savings or money market accounts? Practically nothing! So you are saving dollars almost one to one. No equity building there. If you invest in the market you can do a little better, but the stock market can be risky unless invested in mutual funds which have a much lower return.

And what happens to that money you are spending on rent? Is there any benefit to you? NO! It's paying the landlord's mortgage.

So in our opinion, to suggest that renting is a better way to build equity than buying (if you can afford do do so), is just irresponsible.

- Mick Orton

* We have posted several articles on the wisdom of long-term investing in real estate by typing the word "investing" in the search window above as well as the June 16th article.

posted by SFResidence.com @ 8:28 AM