Real Estate Roundup: Soaring Rents Push Bay Area Home-Affordability Rates Higher

Soaring Rents

With news that Bay Area apartment rental prices have rocketed to record highs comes more word that buying a home is still cheaper than renting in parts of our region. And the situation for would-be buyers has only improved since last year, with homes becoming even more affordable when compared with rents.

According to a new Trulia study, it was 25 percent more affordable to purchase a home in San Francisco in the third quarter than it was to rent, up from 9 percent last summer. In San Jose it was 23 percent cheaper to buy than rent, up from 4 percent in the summer of 2013.

Mortgage rates — currently at 3.97 percent for a 30-year, fixed-rate loan — would have to increase significantly in order to tip the scales in favor of renting in the Bay Area, Trulia says. That wouldn’t happen until rates hit 7 percent in San Francisco and 6.8 percent in San Jose.

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