Please Note: Rent vs. buy calculations can be performed a wide variety of ways, and results will depend on your own financial circumstances and economic projections. The below calculations represent simply one scenario.
This rent vs. buy analysis compares the cost of buying a San Francisco 3-bedroom house at the June 2013 median sales price of $1,050,000 – adjusting for tax deductions and principal pay-down of the mortgage – with the cost of renting an SF 3-bedroom house or apartment at the June 2013 average asking rent of $4500/month (per MyApartmentMap.com).
Assumptions: approximate 20% down-payment; 30-year fixed-rate loan at an APR of 4.5%; and closing costs; property taxes; ongoing insurance and maintenance costs; annual inflation and home appreciation rates - all at what seem to us to be reasonable projections. We've also used a combined income tax rate of 25% for the mortgage interest deduction. But especially when projecting for long periods of time, many of these figures are simply guess-timates. You may perform calculations based upon your own financial situation and projections here:
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These calculations were performed in good faith, but they may contain errors and are subject to revision. It is highly recommended that you speak to your accountant and a qualified loan agent regarding your specific financial situation and goals. Tax law is subject to change.