San Francisco Bay Area rent/buy ratios from the housing calcualtor at patrick.net show that housing is still greatly overpriced in most zip codes.
The following average rent vs buy ratios were calculated by considering 97,537 rents and 58,171 asking prices throughout the Bay Area from January to March 2010, comparing properties with the same number of bedrooms and same single-family vs multi-family status. The results generally show that more expensive neighborhoods remain very overpriced, since annual rents are running at 2% or 3% of asking prices for the same size and type of house in the same location. Such low rents are not much more than property tax and maintenance. This means that in wealthy neighborhoods, the use of more than a million dollars in housing capital can be had essentially for free by renters.
Conversely, cheaper Bay Area neighborhoods now show some real bargains for sale, with annual rents running at 9% or 10% of the purchase price. Landlords are buying these places because they are clearly profitable as rentals as long as rents hold up.
A few zip codes such as Menlo Park are split, having both a poorer area and a richer area with very different rent/buy ratios. The average in this case masks large local differences. Zip codes with fewer than 10 rentals for each housing size category were ignored.
The hightest ratio was 14.8%, in Vallejo, making this area the most promising for new house buyers and for landlords. The lowest ratio was 2.1%, in the Berkeley hills neighborhood with zip code 94705, making this real estate the worst deal for buyers in the Bay Area, on average.
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