Rent vs. buy · California
In California, renting stays cheaper for at least 10 years
Over a 10-year horizon these numbers favour renting: the upfront cost of buying, plus what the down payment could earn invested, isn't recovered within the period. Staying longer, a lower rate, or faster price growth would change that.
The scenario
- Home price
- $765,000
- Monthly rent comparedestimated from local price-to-rent
- $3,188
- Down payment
- 20%
- Mortgage rate
- 6.65% benchmark
- Monthly principal & interest
- $3,929
- Upfront cash to buy
- $175,950
- Property tax
- 0.75% of value / yr
- Home insurance
- $1,600 / yr
What this assumes — and what it leaves out
- Rent rises 3% a year; the home appreciates 3% a year. Both are assumptions, not forecasts — neither is guaranteed, and prices can fall.
- The cash a buyer spends up front (down payment plus 3% closing costs) is credited to the renting side as an investment earning 5% a year. Without that, buying would look better than it is.
- Ownership includes 1% of value a year in maintenance, property tax, insurance. Selling costs of 6% are deducted from the equity you'd walk away with.
- Renting includes $240/yr renter's insurance. Non-cash factors grow at 2.5% a year.
- Not modelled: tax deductions, HOA or condo fees, moving costs, rent control, a variable mortgage rate at renewal, or the value of flexibility. This is a cost comparison, not financial advice.
Property tax and the survey-average insurance premium for California come from the same verified data as the rest of The Mortgage Ledger. The mortgage rate shown is a labelled benchmark for comparison, not a quote. Estimates for guidance only.