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Should you pay your landlord's mortgage?

By
Real Estate Agent with Compass CA DRE# 01215160

It is no secret that San Francisco is the most expensive place in the country in which to live. If we can, those of us here are willing to pay that price to enjoy all the area has to offer.

Rents are sky high. Per Zumper in their January report, the median price of a two-bedroom rental in San Francisco is $4,630.00/month; a one-bedroom is $3,490.00

Although prices of condos in the City aren't low, the cost of buying, with interest rates remaining low to date in 2016, can make the monthly payment less than rent.

One way to avoid multiple offers in this market that favors sellers, is to purchase new. The snapshot below, part of the Mark Company Monthly Report shows that many people are doing just that.

Mark Report, condo projects in SF, June 2016

The Rockwell under constructionLet's look at The Rockwell, for example. This luxury project in lower Pacific Heights consists of 260 units priced between $713,000 and $3,105,000, for an average cost of $1,300/square foot. The West Tower is due to be completed in August, 2016; the East Tower not until September. As of June, only 22 units are still available. The Rockwell is not unique in the number of pre-sales.

Interested in finding out if purchasing now makes sense for you? Give me a call, or shoot me a text or email and we'll talk.

 

Comments (17)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Lottie. Most times it pays to buy if you are going to be someplace long term. Still not a good idea short term! Enjoy your day!

Jul 17, 2016 11:06 PM
Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

It is always better to buy vs rent in my opinion when one is staying in the area. If not, keep it as a rental hire a property management company to keep the asset.

Jul 17, 2016 11:33 PM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Hey Lottie! That's what I always say! Anytime someone says something like "I don't like debt and don't want a mortgage," I remind them they already are paying a mortgage... their landlord's.

Jul 17, 2016 11:35 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Lottie Kendall For the rest of us, these prices are unbelieveable. How do people do it? And how high will it go?

Bill Roberts

Jul 17, 2016 11:38 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

That is an age old question that is hard for many Buyers to answer Lottie Kendall. Even with the facts in hand. 

Jul 17, 2016 11:59 PM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Great information and advice for your area Lottie Kendall . I don't think our rental rates were even that bad during the oil boom.

Jul 18, 2016 01:41 AM
Brian England
Ambrose Realty Management LLC - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I am not a fan of paying someone else's mortgage, so I find it odd that so many people choose to do so.

Jul 18, 2016 04:41 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hello Wayne Martin - real estate is a fabulous long-term investment

Harry F. D'Elia - I agree with you completely!

Nina Hollander - there's a difference between consumer debt (bad) and investment debt (i.e., mortgage - good.) Once people understand the concept, they can surge ahead.

 

Jul 18, 2016 04:57 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hello Bill Roberts - there's no doubt this (San Francisco and the Silicon Valley) is an expensive area. Even with prices to purchase as high as they area, rents are even higher. 

Paul S. Henderson, REALTOR®, Broker, Tacoma Washington - once people understand the concept, they can make wise choices and help themselves.

The rental prices here are mind-boggling, Bob "RealMan" Timm - better to buy if you can if you're going to be here a while.

Jul 18, 2016 05:01 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Brian England - once people have money saved for the down payment, I like to see them pay their own mortgage and reap the benefits for themselves.

Jul 18, 2016 05:02 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Those rental prices are breathtaking, but so are the selling prices. It's all relative, however. I think buying is cheaper than renting in many, if not most, places. 

Jul 18, 2016 06:06 AM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Hi Marte Cliff - our prices are very high, but even here, with today's low mortgage rates, buying is less costly than renting a comparable place. 

Jul 18, 2016 06:59 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

Lottie - It boggles the mind. Your rent for one month would make a down payment on an average house here. 

Jul 18, 2016 07:14 AM
Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

I hope enters in the area will read this and buy a home and call you to be the agent.

Jul 18, 2016 08:45 PM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

Saving for a down payment is often the biggest obstacle a first-time buyer faces, Marte Cliff 

Thank you, Gita Bantwal - if one can buy, and plans to be here 4-5+ years, they should strongly consider buying and make their money work for them, instead of for someone else.

Jul 19, 2016 01:52 AM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Wow those rents would buy 3-5 houses in my market !!!!!!!!!!!!!!!!!

Apr 13, 2017 06:16 PM
Lottie Kendall
Compass - San Francisco, CA
Helping make your real estate dreams a reality

I know, Michael J. Perry  - San Francisco and the Silicon Valley are tough markets. High prices, both rents and purchases, and little inventory. At least when you own a place, you pay your own mortgage and build equity.

Apr 13, 2017 06:19 PM