Renting vs. Buying
The housing market across California has had large price gains over the past years, with statewide median prices attaining November 2007 highs. Consumers often contemplating whether it is more beneficial to buy a property now or continue renting. To assist with this decision, California Association of Realtors has looked at the costs and benefits of renting versus owning property in California and eight of its local regions over a seven year time horizon.
The costs of Buying include the monthly mortgage payment, insurance and taxes, and improvements and repairs. These costs were offset by the benefits of buying: mortgage interest and property tax deductions, and investment appreciation. The costs of Renting include the monthly rent payment and renter insurance, which were offset by the benefits of renting: the appreciation on investing the down payment in the stock market.
For the State of California, consumers can save 96.5 percent per month by buying a property. At the local level, buying in San Diego County will save you 98 percent per month.
In several counties, given price and rent appreciation, buying will net the individual income over the seven year time frame. For example, buying in San Francisco and Alameda will net the owner 119 and 106 percent respectively per month over the purchase time horizon.
These results are given with the caveat that the buyer must have on hand the standard 20 percent downpayment, and are driven by the large increases in both rental prices and home prices across the state. Again, over the 7 year horizon buying make sense financially in these counties.
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