People often quote rent vs. buy costs as a reason the bay area is over priced. I think there’s an important difference about the bay area that is being ignored. In most of the country, land is 28% of the property value. In CA, land is 61% (only HI is higher). People are renting the structure which depreciates, and the landlord gets the appreciation in land value. If you look at just the percent of property value that is the structure, then bay area rent vs. buy makes way more sense. I’d expect buying in the bay area to be ~33% more expensive than renting based on California’s deviation of land value as a percent of property value.
This house would be ~$9,000/mo if purchased with 20% down… Zillow says rent would be $5,241. That makes renting 40% cheaper than buying. I wonder if the numbers would hold over a larger data set?