It’s cheaper to rent than buy a home in these California cities. Where to find a deal
Rental prices in the United States are trending downward, making it more affordable to rent than to own a home in California.
According to a March report from Realtor.com, a real estate website, rental prices in the 50 largest metropolitan areas in the U.S. have been dropping.
“In all of the major housing markets, renting is more affordable than buying a starter home,” Jiayi Xu, an economist with Realtor.com, said in the release.
For eight consecutive months, asking rents have dipped across the United States, including California.
The average rental is about $1,722, which is $36 less than the highest rent recorded in August 2022, the report said.
Buying a starter home now costs 60.1% more than the average asking rent, adding about $1,000 more to an individual’s monthly expenses.
Out of the largest metropolitan areas in the United States, four California cities were in the top 10 where individuals can save money by renting.
Where is it cheaper to rent than buy a home in California?
Here are the top metropolitan areas in California where renting is more affordable than buying a home:
San Francisco ranked No. 4.
Buying a starter home in San Francisco costs 95.5% more than renting one.
The monthly mortgage payment, including property taxes, insurance and Home Owner Association dues, averages $5,504. The median monthly rent payment costs almost half that price at $2,815.
Out of the top 10 metropolitan areas, Los Angeles ranked fifth, with a starter home costing 89.7% more than renting one.
While the median monthly rent payment is $2,830, the monthly mortgage payment in Los Angeles is $5,369.
San Jose ranked No. 6 on the list.
Buying a starter home in San Jose costs 86.7% more than renting one.
The median monthly rent payment costs $3,206 and the monthly mortgage payment averages $5,986.
Sacramento ranked ninth out of the top 10 metropolitan areas.
It costs around 82.1% more to buy a starter home than renting one.
While the median monthly rent payment costs $1,845, the average monthly mortgage payment in Sacramento costs $3,359.
Where is it cheaper to rent than buy a home in the US?
These are the top 10 metro areas where renting is cheaper than buying a home, the Realtor.com report said:
- Austin, Texas
- Seattle
- Phoenix
- San Francisco
- Los Angeles
- San Jose
- Nashville, Tennessee
- Portland, Oregon
- Sacramento
- Houston
How much does it cost to buy a home in California?
According to the California Association of Realtors’ April home sales and price report, the median sold price of an existing single-family home in California hit a record high of $904,210.
For the median sold price of an existing single-family home of $904,210, a 20% down payment would be $180,842 in California.
Monthly payments on a 30-year fixed loan for this price with about a 7.04% interest rate would be around $5,555, including insurance and taxes, according to Zillow’s mortgage calculator.
This story was originally published May 21, 2024 at 12:41 PM with the headline "It’s cheaper to rent than buy a home in these California cities. Where to find a deal."
