A few readers sent us this totally cool link, and so we must post for it you.
Is It Better to Buy or Rent?
Compare the costs of renting and buying equivalent homes. Click
CALCULATE each time you change an entry.
We had some fun with this for a while. Make sure to tweak the sliders. According to Dataquick, you can use a 2.4% appreciation for San Francisco.  What was that game show that spun that wheel and the players said, “big money, big money, no whammies?” We’ll substitute to apply to us, “Come on big appreciation, no Whammies!”
Of course, it could be a good time to buy rental property and collect those rents.

Is it better to rent or buy graph [NY Times Online]
Is it better to rent or buy article [NY Times Online]
Inger Hogstrom Photography [one of the readers that sent us the link]


  1. not even funny. we stay under, by a lot but we knew about it – and we figured out about the same number to plan how much our house cost to just live in it – thus the minimum income needed to avoid selling.

    What about people who have a monthly mortgage of 20.000 [for a house that would rent about 6K top] (cf the foreclosure on marina boulevard)? the graph is even funnier. Thanks for that cool link.

  2. In San Francisco, the graph will skew if you are living in a rent-controlled property, meaning the annual rent increase is limited to 60% of the increase in the Consumer Price Index for All Urban Consumers in the Bay Area. (For 2007-2008, the allowable rent increase is 1.5%.)

    “Buying is never better than renting over 30 years if annual home appreciation is 2% and annual rent increase is 2%.”

    If annual rent increase is 2% and annual home appreciation is 5%, same deal. It’s only when home appreciation tops 6% that it makes any sense to buy, according to this resource, and then the break point is only five years.

    Interesting tool.

  3. Buying is always better than renting. You puchase hold for 10 years and sell.

    In 1996 ,you purchase a three unit building for $500,000, make no improvements and in 2006, you sell it for $1,500,000. Can you spell $1,000,000 profit.

    This is the story of my three unit building in the Haight that I purchased for $1,500,000.

  4. Maria,

    There are many sides to this debate, and we appreciate you sharing your opinion. For some, buying is simply not an option. But, yes…in the long run, it is usually better to buy than rent. If for nothing else than being able to remodel, live in, and enjoy the roof over your head, and space within the walls.

  5. One of the biggest factors is your tax rate. Frankly, people in the 35% federal tax rate are better off buying.

  6. Maria sounds like a realtor, or just someone who happened to cash in on the bubble. Typical housing returns, averaged over time, are about 4% per year. Using a standard interest formula, I=Prt, her interest yield at that time would be 200,000$ on her 0.5 million dollar house.

    Anecdotal data does not make an argument. Plenty of people are osing their homes now because housing has a NEGATIVE return value. Very few people should expect to see any sort of returns like Maria is describing.

  7. Maria,

    1st – Edit before you enter a comment.
    2nd – A single event resulting in a positive outcome is hardly an arguement for proper statistical analysis. A much larger sample size over a far greater period of time is needed to properly assess the growth potential of any asset class. For example, if a person borrowed $1,000 from their friend, went to a roulette table, bet on black and won, it would not mean this outcome should be expected to occur again the next time.

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