It’s Still Much Cheaper to Rent Than Buy in San Francisco. That May Never Change.


Among American cities, San Francisco has one of the highest percentages of residents who rent — meaning that tenant rights have distinct importance in the seven-by-seven.

The idea of homeownership existing synonymous with the American Dream has been held in society since the 1940s, gaining traction when World War II ended in 1945. It was a trope common in American media — film, television, publications — that remained quasi-attainable for decades. But by the 1990s, the fever dream tied to owning one’s home began to cool. 

Throughout that decade, the average single-family home cost climbed to about three times more than the median household income nationwide.

Basically, the American Dream and homeownership entered into a realm of incomprehensibility (and financial responsibility) for millions of Americans. And it’s a trend that’s only continued to grow more nightmarish as time’s gone on.

Fast forward to 2023, and the average home price in the United States sits at $416,000 — while the federal minimum wage remains unchanged since 2009 at $7.25. The average salary in this country is currently around $70,000; this means that a single individual’s annual income is six times more than the average home price.

For hundreds of thousands — millions, actually — in California, which contains one of the most expensive, most competitive, most soul-crushing real estate markets in the country, renting is a necessity. It’s a way of living that’s rooted in reality… and, in many cases, is actually more affordable than owning one’s home.

In San Francisco, stories about how we found our apartments sit in tandem with our wishful pontifications about owning a home in the metropolis. Mind you, the latter yearning becomes more sinister by the year; the average price for a home in San Francisco is currently $1,285,602 — which is actually down 12.8% over the past year.

Contrary to what’s considered commonsensical financial advisory, it’s actually cheaper to rent in San Francisco than it is to own property. And the delta is far wider, much deeper than you’d think.

Per a recent study from Redfin, it’s now nearly twice as expensive to buy a home than to rent in San Francisco. (The Bay Area, too, now has the largest homeownership premium of any other major U.S. metropolitan area — where literally zero homes were cheaper to buy than rent this past June.)

Using a price-to-rent, a common metric that takes into account the costs of owning a home to renting, it’s, on average, 139% more to buy than rent in SF. Homeownership models extrapolated in other American metros — like, say, Chicago — show homeownership becoming more affordable than renting at 15 years. At most about 20 years. 

In San Francisco? Renting an apartment at current market rates will never, ever (like, ever) be more expensive than buying a home at present values. In fact, assuming you stayed inside the same rent-controlled apartment leased at current market prices, you could be saving as much as $800,000 over the next 30 years by renting as opposed to buying in San Francisco.

With home ownership’s tie to the American Dream nearly, entirely, absolutely unraveled, how does that generation fantasy look like now? It, perhaps, sits in a wheelhouse where housing exists as a quintessential human right — where unjust eviction reasons and tenant rights are upheld and ubiquitous; where landlords don’t capitalize on inhumane price gouging; where rent increases are decided and done under local, state, and national ordinances. 

When the idea of home isn’t tied to a property fence, but rather an overwhelming sense of security, financial and otherwise.

Feature image: Courtesy of Wikimedia Commons

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