I never imagined I would be saying this, but the outrageous rent Zac and I pay to live in San Francisco may actually be a bargain. At least, that’s the impression I got from a recent New York Times article called “A Word of Advice During a Housing Slump: Rent.”

Mr. Housing Bubble!Author David Leonhardt reports, “With the spring moving season under way, The New York Times has done an analysis of buying vs. renting in every major metropolitan area. The analysis includes data on housing costs and looks at different possibilities for the path of home prices in coming years.

“It found that even though rents have recently jumped, the costs that come with buying a home ” mortgage payments, property taxes, fees to real estate agents ” remain a lot higher than the costs of renting. So buyers in many places are basically betting that home prices will rise smartly in the near future.”

Curiosity made me play with their interactive graphic to determine how long it would be until buying a home becomes better than renting. I selected regional data for San Francisco, and I plugged in my own numbers as prompted. There’s a sliding meter that allows you to play around with different annual home appreciation scenarios, and a similar scale for annual rent price increases or decreases. I encourage readers to utilize this graphic as well. The results are quite surprising. Here’s how the graph helped me decide renting is better than buying for me and Zac.

By clicking on the question mark next to “Monthly Rent”, the graph translates your rent to generate a home price. Conversely, a homeowner can input their home price to get back a monthly rent estimate. Monthly rent for Zac and me translated to a $459,360 home in San Francisco.

The “annual rent increase meter” stays at 3% for our calculations because we live in a rent-controlled building, which means our rent is guaranteed to never increase beyond 3% annually. Now picking a value for the “annual home price appreciation meter” is tricky, but this is where the sliding function comes in handy- just slide the meter in either direction to see how home ownership costs compare to renting costs across different percentages of annual home appreciation.

The National Association of Realtors expects a 0.7% dip in the median sale price for existing U.S. homes, and only a 0.4% rise for new homes. Based on NAR predictions and housing market uncertainty, I simply left the “annual home price appreciation meter” at 0% to run an initial calculation.

Not surprisingly, buying is never better than renting over the course of 30 years with my numbers. That’s longer than the length of the mortgage.

However, the Bay Area real estate market plays by some whacky rules, and median sale prices are actually increasing. The latest numbers say that median home prices in March 2007 were up 2.1% from March 2006.

Even at 2% annual appreciation, buying is never better than renting over the course of 30 years according to the graph.

It would take 16 years of 4% annual home appreciation to break even with our hypothetical investment and do better than a renter. With 5% annual appreciation, it would only take six years to break even. But who knows if 5% annual appreciation is actually possible in an overpriced region or even in a shaky housing market?

I shouldn’t have been surprised by the numbers I got back according to Leonhardt:

“Over the next five years, which is about the average amount of time recent buyers have remained in their homes, prices in the Los Angeles area would have to rise more than 5 percent a year for a typical buyer there to do better than a renter. The same is true in Phoenix, Las Vegas, the New York region, Northern California and South Florida. In the Boston and Washington areas, the break-even point is about 4 percent.”

It’s a shame I never had the money to buy a house sooner. However, I’m not discouraged. In fact, the buying/renting graph leads me to believe that Zac and I should start saving aggressively for a down payment on a house as soon as possible. Why?

1) To buy a house now means greater expenses come with owning a house that aren’t recovered over 30 years, assuming annual appreciation is less than 4%. Why not take advantage of our “rent savings” to pay down debts and start socking money away for a down payment? After all, saving is doable even with our expensive rent.

2) The housing market will stabilize eventually. Saving down payment money now will allow us to be prepared to buy a home when the housing market is healthy again.

The other option is that we can move where housing prices are more reasonable. But we have no idea where we’ll settle down and when.

In the meantime, I’m just going to feel greatly comforted by the knowledge that Zac and I are on the right financial track simply because we don’t have the money to rush out and buy a house. Twenty-somethings need all the comfort they can get when it comes to personal finance, and if that means taking pride in lack of home ownership during a crappy housing market, so be it.