With San Francisco having the nation’s second-largest increase in apartment rents last quarter, at 4.5 percent, and falling interest rates to purchase a home, renters who are looking at their housing expenses are coming to the conclusion that owning makes more financial sense than renting. This is evident from the influx of local home buyers in the city and an increase in the number of homes sold.

Even though the number of single-family homes for sale has decreased since September 2010 by 16.1 percent citywide, the number of single-family homes under contract this past month rose by 13.9 percent, while the number of homes sold also increased by 5.7 percent. For properties priced below $700,000, the months of supply inventory dropped by 38.7 percent to a reading of 2.5 months. For properties priced between $700,000 and $1.2 million, the months of supply inventory fell by 26.9 percent, also to 2.5 months. Months of supply of less than three months normally indicates a seller's market where sellers have more negotiating leverage against buyers.

Condominium Sales

Although condominium sales throughout the city fell slightly by 6.8 percent in September, the number of condominiums under contract rose by 30.4 percent compared to September 2010. For condominiums priced between $500,000 and $900,000, the months of supply inventory contracted fell by 47.9 percent to a reading of 3.1 months. For luxury condominiums priced above $900,000, the months of supply inventory also fell, by 41.5 percent to 4.7 months.