San Francisco's housing market is unlike anywhere else in the country. With median home prices around $1.4 million and rents that can top $4,500 for a modest 2 bedroom, the rent vs buy decision requires careful analysis. Here's what the numbers actually show.
San Francisco Housing Market: 2025 Reality Check
Let's start with the current state of the market based on real data:
Home Prices by Neighborhood
- Pacific Heights / Presidio Heights: $2.5M $4M+ (luxury market)
- Noe Valley / Castro: $1.8M $2.5M (family friendly)
- Mission District / SOMA: $1.2M $1.8M (condos/lofts)
- Outer Sunset / Richmond: $1.1M $1.5M (more affordable)
- Excelsior / Visitacion Valley: $900K $1.2M (value neighborhoods)
Rental Rates (2 Bedroom)
- Financial District / SoMa: $4,500 $6,000/month
- Marina / Pacific Heights: $4,200 $5,500/month
- Mission / Castro: $3,800 $4,800/month
- Sunset / Richmond: $3,250 $4,000/month
- Outer neighborhoods: $2,800 $3,500/month
Key Costs
- Property tax: 1.2% of assessed value annually
- HOA fees (condos): $500 $1,200/month typical
- Homeowners insurance: $150 $300/month
- Earthquake insurance: $200 $400/month (optional but recommended)
The Real Math: $1.4M Home vs. $4,000 Rent
Let's model a common scenario: buying a $1.4 million condo in the Mission versus renting a comparable unit for $4,000/month.
Buying Scenario
Purchase details:
- Home price: $1,400,000
- Down payment (20%): $280,000
- Loan amount: $1,120,000
- Interest rate: 6.5%
- Loan term: 30 years
Monthly costs:
- Principal & Interest: $7,078
- Property tax (1.2%): $1,400
- HOA fees: $650
- Homeowners insurance: $200
- Earthquake insurance: $300
- Maintenance reserve: $350
- Total monthly: $9,978
Upfront costs:
- Down payment: $280,000
- Closing costs (2%): $28,000
- Immediate repairs/updates: $15,000
- Total cash needed: $323,000
Renting Scenario
- Monthly rent: $4,000
- Renters insurance: $25
- Total monthly: $4,025
The difference: Owning costs $5,953 more per month than renting ($9,978 vs $4,025).
That's $71,436 more per year to own. How do you ever make up that difference?
The Breakeven Timeline: When Does Buying Win?
The key is that ownership costs decrease over time while rent increases. Here's how the 10 year comparison shakes out:
Year 1
- Renting cost: $48,300 (rent + insurance)
- Owning cost: $119,736 (monthly costs) + $323,000 (upfront) = $442,736 total
- Net equity built: ~$16,000 (principal paydown)
- Winner: Renting by $394,436
Year 5
- Renting cumulative: $263,000 (assuming 4% annual increases)
- Owning cumulative: $922,000 total spent
- Equity built: ~$105,000 (principal) + ~$210,000 (appreciation at 3%/yr) = $315,000
- Net position owning: $607,000
- Winner: Renting by $344,000
Year 10
- Renting cumulative: $577,000
- Owning cumulative: $1,520,000 total spent
- Equity built: ~$245,000 (principal) + ~$483,000 (appreciation) = $728,000
- Net position owning: $792,000
- Net position renting: $577,000 (but you still have your $323K if invested)
- Winner: Still complex, approaching breakeven
The breakeven point in this scenario: approximately 11 12 years.
That assumes 3% annual home appreciation and 4% annual rent increases. If appreciation is higher or rent increases are lower, the timeline shifts.
Use the rent vs buy calculator to model your specific numbers and see exactly when buying makes financial sense for your situation.
San Francisco Specific Factors That Change the Calculus
1. Tech Industry Volatility
San Francisco's economy is heavily tied to tech. The 2022 2023 tech layoffs saw SF rents drop 15 20% while home prices fell 10 12% in some neighborhoods. If you work in tech, this volatility matters:
- Buying makes you vulnerable if you lose your job and need to sell in a down market
- Renting gives you flexibility to relocate if better opportunities arise
- Remote work has changed the equation, many tech workers left SF entirely
If your job could disappear in a layoff wave, think twice about buying, even if the long term math works.
2. Rent Control and Tenant Protections
San Francisco has some of the strongest rent control laws in the country. If you're in a rent controlled unit built before 1979, your landlord can only raise rent by a small percentage annually (around 2 3% tied to CPI).
This is a huge advantage for long term renters. While market rate units might jump from $4,000 to $4,500 in a year, your rent controlled unit might only go from $4,000 to $4,120.
If you have a rent controlled apartment, the financial case for buying weakens significantly.
3. Proposition 13 Tax Benefits
California's Prop 13 locks your property tax assessment at purchase price, with a maximum 2% annual increase. This is powerful for long term owners.
If you buy at $1.4M and the home appreciates to $2M over 10 years, your tax is still based on $1.4M (plus modest annual increases), not the current $2M value. Meanwhile, a new buyer pays tax on the full $2M.
This creates an incentive to stay put once you buy, as selling and re buying means resetting your tax basis to current high prices.
4. Limited Supply and Geography
San Francisco is only 7x7 miles, surrounded by water on three sides. They're not making more land. Strict zoning limits new construction.
This supply constraint supports prices long term, but it also means prices can spike quickly when demand surges. The volatility goes both ways.
5. Earthquake Risk
Earthquake insurance adds $200 400/month and is generally recommended. This is a cost renters don't bear, your landlord carries it.
After a major earthquake, uninsured homeowners could face catastrophic losses. Factor this into your ownership costs.
Neighborhood Guide: Where the Math Works Better
Best Neighborhoods for Buyers (Shorter Breakeven)
Outer Sunset / Parkside
- Median home: $1.2M
- Typical rent: $3,400
- Breakeven: ~8 9 years
- Why it works: Lower prices, family oriented, good schools, ocean access
Excelsior / Outer Mission
- Median home: $1.0M
- Typical rent: $3,000
- Breakeven: ~7 8 years
- Why it works: Most affordable SF neighborhood, improving, good transit
Neighborhoods Where Renting Often Wins
SoMa / Financial District
- Median condo: $1.4M
- Typical rent: $4,500
- Breakeven: 12+ years
- Why rent wins: High HOA fees, commercial feel, young professionals who relocate often
Pacific Heights
- Median home: $3.0M+
- Typical rent: $5,500
- Breakeven: 15+ years
- Why rent wins: Ultra premium prices, better to invest the down payment elsewhere
Who Should Buy vs. Rent in San Francisco
Strong Case for Buying:
- Stable job outside tech (healthcare, education, government)
- Planning to stay 10+ years
- Starting or growing a family
- Have $300K+ saved and comfortable with the payment
- Want to lock in housing costs against future rent increases
- Value stability and control over your living space
Strong Case for Renting:
- Work in tech with layoff risk or expect to relocate
- Early in career, high earning potential elsewhere
- Don't have $300K saved or it would drain your savings
- Prefer flexibility to move neighborhoods or cities
- Can invest the down payment for potentially higher returns
- In a rent controlled unit with stable below market rent
The Middle Ground:
Many SF residents rent for 5 10 years while building their career and savings, then buy when they're truly ready to settle down. There's no shame in renting through your 20s and early 30s, especially in a market this expensive.
How to Run Your Own San Francisco Analysis
Ready to calculate your specific scenario? Here's how:
- Get real numbers for your target neighborhood. Check Zillow, Redfin, or Craigslist for current prices and rents. SF varies wildly block by block.
- Include ALL ownership costs. Property tax (1.2%), HOA ($500 1,200/month for condos), insurance, earthquake insurance, and maintenance. Many people forget HOA fees and are shocked when they see total monthly costs.
- Factor in your opportunity cost. That $300K down payment could be invested. At 8% annual returns, it doubles every 9 years. Compare that to home appreciation around 3 4% historically.
- Be realistic about your timeline. Will you really stay 10+ years? In SF's transient tech culture, that's rare. If you're only 70% confident, build that uncertainty into your decision.
- Use the calculator. Go to our rent vs buy calculator, plug in your SF specific numbers, and see the breakeven timeline.
Frequently Asked Questions
What is the median home price in San Francisco in 2025?
As of 2025, the median home price in San Francisco ranges from $1.29 million to $1.5 million depending on neighborhood. Popular areas like Noe Valley and Pacific Heights are at the higher end, while neighborhoods like the Outer Sunset or Excelsior are more affordable relative to the SF average.
How much does it cost to rent in San Francisco?
Average rent in San Francisco ranges from $3,250 to $4,500 per month for a 2 bedroom apartment. Studio apartments typically run $2,400 $3,200, while 3 bedroom units can reach $5,500 $7,000 in popular neighborhoods. Rent varies significantly by neighborhood and building amenities.
How long before buying makes sense in San Francisco?
The breakeven point in San Francisco typically ranges from 8 12 years due to high home prices relative to rents. This assumes normal appreciation rates and that you can afford the 20% down payment (around $260,000 $300,000). If you're not confident you'll stay at least 10 years, renting is usually the better financial choice.
What is the property tax rate in San Francisco?
San Francisco property tax is approximately 1.2% of assessed value annually. On a $1.4 million home, that's $16,800 per year or $1,400 per month. Thanks to California's Proposition 13, your assessed value is locked at purchase price and can only increase by a maximum of 2% per year, providing long term tax predictability.
Should I wait for a San Francisco housing market crash?
Trying to time the SF housing market is extremely difficult. While tech sector volatility can impact prices short term, San Francisco has limited housing supply due to geography and zoning restrictions, which provides price support. Buy when you're financially ready and planning to stay long term, not based on market timing predictions.