Renting vs Buying a Home in San Francisco

My lease recently recently ran out on my apartment in North Beach and I had a difficult decision to make - whether it made sense to rent that apartment for another year, move and try to get a better deal, or find a place to buy now that prices have come down considerably in many buildings in San Francisco. 

My North Beach apartment cost me $2,800/month, and didn't include parking, which was a huge inconvenience.  It forced me to rent a garage parking space a couple blocks away for $260/month.  The place was a decent size and offered a roof deck with views of the bay, but given the state of the economy and the real estate market, I knew I could get a better deal as it had recently became a renter's market in the city.  

Buying a place in San Francisco's SoMa / South Beach area sounded appealing, but I wasn't sure if it was the right time to buy yet.  With the glut of new condos on the market that were still unsold, I felt that the market could still see a significant drop.  Places I considered were the Infinity, the Millenium Tower and One Rincon Hill.  While the prices in these buildings have been reduced and some units are selling for 25% discounts to what they originally were listed for, I still feel like there is significant pricing pressure that will continue to drive down prices.  The developers of these buildings need to unload the units so they can get the cash to develop there upcoming projects.  Homeowner's fees in these buildings are also extremely high, over $700 in most cases, which significantly increases the monthly cost of owning.  

My friend just moved into One Rincon Hill so I went to take a look at the building with him and really loved what I saw.  I didn't ask how much he paid for his unit (40th floor, east facing bay views), but I know that the developer through in enormous discounts for upgrades and sold it for a huge discount.  I don't think stories like this are uncommon in other buildings, but it tells me that the building developers are pretty desperate to sell and probably aren't anticipating a huge rebound in pricing anytime soon.  

Given the data points I had and then trends I've been seeing in declining prices for condos in SoMa and South Beach, I felt it would be best to invest my money elsewhere for the time being and continue to rent.  

The Outcome:  I chose to rent a fantastic unit in a building in SoMa that's 2 level's with floor to ceiling windows.  The unit would have sold for around $1 million back in 2006 of 2007 but today rents for a significant discount.  I got a great deal on the place and pay less now than I did back at my North Beach apartment which wasn't nearly as luxurious or large.  I'll be saving my money for another year and see if the market feels right to buy next summer instead.  I predict prices will be lower and interest rates won't be too far off what they are now, so hopefully I'm correct!