The renting vs owning California picture now clearly favors renters, as new data shows they save far more than homeowners each month. According to Zillow, the median rent in California is $2,985 per month, while the actual monthly cost of owning a median-priced home at $933,000 reaches $6,316.
Zillow calculated ownership costs by adding mortgage payments, property taxes, insurance, and maintenance. The analysis assumed a 6.4% mortgage interest rate and a 20% down payment.
On that basis, buying a home in California costs $3,331 more per month than renting, a difference of 47%. In simple dollar terms, renters are saving thousands of dollars every month.
Even if rent rises 5% each year while ownership costs stay the same, Zillow estimates it would take 16 years for monthly rent and ownership costs to match. If rising insurance and maintenance expenses are also considered, the gap becomes even larger.
Experts say this level of difference means the old saying that “rent is throwing money away” no longer holds true. They note that from a purely financial standpoint, renting can be a much more rational choice.
Within California, the gap is especially wide in major metro areas. In Los Angeles and Orange County, the difference between ownership and rent is $3,450 per month, or $41,400 per year, and it would take about 18 years for the two costs to equalize. In San Francisco, buying a home costs $4,322 more per month than renting, with the breakeven point again around 18 years.
In San Diego, the monthly gap is $3,211, and costs are projected to converge after about 15 years. In Sacramento, the difference is $2,078 per month, requiring roughly 13 years for rent and ownership costs to line up. While there are differences by region, the overall pattern in large cities is that renting is significantly cheaper than owning.
The same trend extends beyond California. Across 26 metro areas nationwide excluding California, the average rent is $1,838 a month, while average homeownership costs reach $3,383. That means renters save $1,545 each month, or 55%, and the gap closes only after about 13 years.
Experts point to structural imbalances in the housing market as the main cause. They argue that surging home prices and higher mortgage rates have raised the barriers to buying, widening the cost difference between renting and owning compared with several years ago.
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
