The purchase of a new home is typically one of the largest financial transactions and investments of one’s life. Whatever home you purchase should work for you now—fulfilling your basic housing requirements at an affordable cost. Historically, San Francisco real estate has been a good investment over the longer term. This is due to the advantages of leverage; the significant tax benefits of homeownership; economic, demographic and geographic conditions in the Bay Area; and long-term appreciation trends.

Here are some questions to consider in the rent versus buy decision:

• How long do you plan to own the home you purchase? (Buying and selling in the short term always entails more risk.)
• How does the cost of home ownership, with existing tax benefits, compare to renting?
• Are financing interest rates advantageous for buyers? (A low fixed rate never increases—unlike rents—and can make an enormous difference in affordability.)
• Are economic conditions improving? Especially after a recession and downturn in home values, values typically begin to appreciate again.
• How does ownership compare in the calculation of building financial assets over time? (Typically, if one doesn’t “refinance out” increasing home equity, property ownership acts as a “forced” savings account to build household wealth as one pays down the principal balance on the loan and the value of the home appreciates.)
• How important is it to you to own the home you live in, with all that implies?

Any investment has both potential risks and rewards—which only you can weigh according to your own circumstances and your projection of future economic trends. Buyers should consult with a loan agent and accountant to determine the options, costs and tax deductions that may apply to them.