Findings of new Zumper report
Renting Beats Buying in Many California Cities
The debate over whether to buy or rent a home continues to tilt heavily in one direction in California’s largest cities, where home prices have been largely stagnant in recent years, weakening one of the strongest arguments for buying: appreciation.
Meanwhile, the cost of homeownership keeps climbing as taxes and insurance grow more expensive, and mortgage rates hover around 6%.
The calculations naturally vary from market to market.
Now, a new report from Zumper shows which cities make the most financial sense for buyers and which ones are no-brainers for renters who are on the fence.
The online real estate company looked at two main factors: the price-to-rent ratio, a market’s median home price divided by a year’s median rent, and the PITI cost delta, the gap between a monthly mortgage payment and rent cost.
Under either measurement, California’s biggest cities are far more affordable to rent than to buy.
San Jose has the dubious honor of being the most lopsided market in the U.S.
“With a median home price of $2,030,000 against an all-bedroom median rent of $3,073, San Jose’s price-to-rent ratio is 55.0, which is more than double the national midpoint and the highest of any market we analyzed,” Zumper analysts wrote. “Buying here costs roughly $8,593 more per month than renting.”
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Anaheim ranked second on the list with a 48.8 price-to-rent ratio, based on a $1,442,900 median home price and $2,514 rent. Owning costs $5,702 more than renting per month.
San Diego ranked sixth, with a $1,050,000 median price compared with $2,818 rent.
“Even with some of the highest rents in the country, home prices in San Diego climb faster, and owning costs about $3,208 more per month than renting,” Zumper said.
San Francisco came in at No. 8, with homeownership costing $3,832 more per month than renting, and Los Angeles ranked No. 9, with a $2,325 gap.
On the opposite end of the spectrum are cities with the lowest price-to-rent ratios, where the math leans toward buying.
Syracuse, New York, is the most “buy-favorable” market among the nation’s largest metropolitan areas.
“A $249,700 median price against $1,650 rent produces a 12.6 ratio, the lowest of any market analyzed,” Zumper wrote. “And the monthly gap is tiny, owning costs only about $237 more than renting.”
Pittsburgh, New York City, Charleston, South Carolina, and New Orleans also have relatively low price-to-rent ratios and PITI deltas.
Among California markets, Bakersfield stands out as the most favorable for buyers, where the monthly gap between owning and renting is $808.
Source: KTLA5
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