Rent vs buy house in Bay Area

Forbes published the list of most expensive cities for renters in 2007

1. New York
2. San Francisco
3. Boston
4. San Jose
5. Los Angeles

In the numbers for Bay Area rent market:

San Francisco, Calif. $1,904

Very few residents here can afford the city's $800,000 median home-sale price. The result is an extremely tight rental market, which is expected to see the largest year-over-year jump, with rents expected to grow 8.6%. It's very difficult to add new inventory due to limited space, cost of business and developers' reluctance to dive into the fervently rent-controlled market.

San Jose, Calif. $1,612

The city to San Francisco's south suffers from many of the same ailments; there are, however, fewer barriers to expansion. San Jose rents are expected to climb 5.5% this year thanks to a low vacancy rate second only to New York City. Investor-cap rates are high, which, not surprisingly, means that construction in the rental market will surge 29%, relaxing some price pressure.

That's good news for Bay Area landlords, but bad for renters.

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