Compare 5-year financial outcomes for renting and buying on the SF Peninsula. Includes appreciation, mortgage paydown, tax benefits, and opportunity cost.
Two reasons. First, Peninsula price-to-rent ratios are some of the highest in the country, often 35x to 45x annual rent versus a national average of 15x to 20x. Second, if you invest your would-be down payment in a diversified portfolio, the long-term return can rival or beat appreciation in flat market cycles. Buying wins when you stay 7+ years and the market appreciates at or above the long-term Peninsula average.
Buying for under 5 years is rarely the financially correct choice on the Peninsula. Closing costs (roughly 2% buy + 6% sell = 8% round-trip) eat most of the appreciation in a typical 4% per year market. The exception is a strong-appreciation cycle or a property in an A+ school zone where you also save private school tuition.
Not directly, because the 2017 SALT cap and standard deduction increase eliminated this benefit for most middle-income households. For high-earners on the Peninsula, the mortgage interest and property tax deduction can still produce $5K to $20K per year in tax savings depending on loan size and bracket. Talk to your CPA for a precise figure.
Lisa runs personalized rent vs. buy comparisons using actual market comps, your tax bracket, and your time horizon.
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