(KRON) — The Bay Area is the most expensive place in the country to own a home, according to a new Redfin report.
The report says the Bay Area has the highest homeownership premiums, where it’s twice as expensive to buy a home than it is to rent. Mortgage rates have gone up everywhere, but in San Francisco, San Jose and Oakland more homes are considered high end. The interest rates of those homes are what make them so much more expensive to own.
The high cost of living isn’t news to Bay Area residents, but for those deciding between renting or owning a home, Redfin says it’s a cheaper option to rent here.
Chief Economist at Redfin, Daryl Fairweather says that’s because of higher mortgage rates and the interest on them.
“Having a really large amount of debt it allows that compounding to kind of accumulate faster than if it was a small amount of debt. So that’s it hurts a bit harder in the most high-end markets,” Fairweather said.
The Redfin report listed San Jose as having the largest homeownership premiums where it’s 165% more expensive to buy than to rent.
Next was San Francisco with a 139% ownership premium, followed by Oakland where homes are 99% more expensive to buy than rent.
Senior Economist Jeff Tucker at Zillow explained what those percentages look like in dollar amounts when searching Zillow.
“I could find some single family’s homes for rent in San Francisco in the Sunset for in the Ball park of 4,500 to rent and those are homes that would be selling for one in a quarter one in a half million dollars meaning they would be carrying a mortgage payment of 6,000 or more for someone to buy them today,” Tucker said.
According to Redfin, you may save money on renting but in the long run rent prices could go up.
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Realtor and Founder of District Homes in Berkeley, Anna Bellomo discussed the perks of buying. She looked over the Redfin report and says the numbers are true, but there’s more to factor in.
“Do you have kids starting school, are you having a baby, are you downsizing, and you need to sell. So it’s very hard to time the market.”
There was a silver lining in the Redfin Report. Due to rising mortgage rates, home prices are dropping at a faster rate in the Bay Area than anywhere else in the US.