It would take almost two decades for California rents to reach the monthly financial pain that a homebuyer faces today.<\/p>\n
Tenants are often nudged to buy a home with the notion that owning has relatively fixed costs, while rents are ever-rising.<\/p>\n
Well, ownership costs are so out of whack that the homebuying adage may apply. Look what my trusty spreadsheet<\/a> found in\u00a0Zillow data on rents and home prices<\/a> for 50 larger U.S. metropolitan areas, including six in California.<\/p>\n The median rent of the six California metros was $2,929 a month in September. Meanwhile, homebuyers in those markets had an estimated $6,770 in monthly house payments on a $929,600 purchase.<\/p>\n That\u2019s $3,839 in monthly savings for the tenant. How big is that gap?<\/p>\n Let\u2019s assume that rents in those six California metros grow at a 5.1% annual pace, the average gain over the last 11 years. That means it will take roughly 17 years for rent to match what a homebuyer theoretically paid in September 2026.<\/p>\n Yes, tenant savings wouldn\u2019t disappear until 2043.<\/p>\n By the way, that estimated payment was calculated based on a purchase at Zillow\u2019s median house value, financed with the average 30-year fixed mortgage rate of 6.9% in September, according to Freddie Mac data.<\/a> That rate was boosted by 2.2 percentage points to account for often-ignored costs, property taxes and insurance, plus a rate premium for assuming only a 10% down payment.<\/p>\n Nationally speaking<\/p>\n This gap is not just a California thing. Nationally, the savings are there, too \u2013 just smaller.<\/p>\n There\u2019s $739 in monthly savings between September\u2019s $1,932 U.S. median rent and the $2,670 estimated house payment on a $366,900 purchase.<\/p>\n Assuming rents will grow nationwide at their 4.6% average rate since 2015, it would take an American renter seven years for their monthly check to the landlord to equal the buyer\u2019s cost in September 2026.<\/p>\n U.S. extremes: San Jose is at 36 years while it\u2019s just three years in Pittsburgh.<\/p>\n Metro math<\/p>\n Look at the six California metros, ranked by the years it would take for a tenant to pay September 2026 homebuying costs if local rents increase at their historical norm since 2015:<\/p>\n \u2013 San Jose: 36 years for the current $7,365 monthly savings to disappear, assuming rents grow at their 3% average annual rate. September\u2019s gap was $3,812 for rent vs. the $11,180 estimated house payment on a $1.5 million purchase.<\/p>\n \u2013 San Francisco: 27 years for $4,790 monthly savings to disappear with rents growing at 3.3%. September\u2019s gap was $3,445 in rent vs. the $8,240 payment on a $1.1 million purchase.<\/p>\n \u2013 Los Angeles-Orange County: 20 years for $4,008 monthly savings to disappear with rents growing at 4.3%. September\u2019s gap was $2,929 in rent vs. a $6,940 payment on a $953,000 purchase.<\/p>\n \u2013 San Diego: 16 years for $3,801 monthly savings to disappear with rents growing at 5.2%. September\u2019s gap was $2,967 in rent vs. a $6,770 payment on a $930,000 purchase.<\/p>\n \u2013 Sacramento: 12 years for $1,914 monthly savings to disappear if rents grow at an average rate of 5.3%. September\u2019s gap was $2,269 in rent vs. $4,180 payment on a $575,000 purchase.<\/p>\n \u2013 Inland Empire: 9 years for $1,701 monthly savings to disappear with rents growing at 5.9%. September\u2019s gap was $2,533 in rent vs. $4,230 in payments on a $582,000 purchase.<\/p>\n Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com<\/a><\/p>\n Try Jonathan Lansner\u2019s Substack collection of economic trends. CLICK HERE<\/a>!<\/p>\n September\u2019s most popular Southern California real estate stories \u2026<\/p>\n No. 1: Taco Bell relocating its longtime Irvine headquarters <\/a><\/p>\n No. 2: Diane Keaton\u2019s former Laguna Beach flip lists for $10 million<\/a><\/p>\n No. 3: What\u2019s the best housing market in Southern California? <\/a><\/p>\n No. 4: Dolly Parton\u2019s former Solvang cottage compound lists for $2 million <\/a><\/p>\n No. 5: Newport Coast home linked to Latin music star Peso Pluma seeks $14 million<\/a><\/p>\n No. 6: Ultra-luxe, \u2018overengineered\u2019 beachfront Dana Point estate seeks $65 million <\/a><\/p>\n No. 7: California wants more fines against Huntington Beach in housing lawsuit <\/a><\/p>\n No. 8: Laguna Cliffs Marriott Resort rebrands amid renovation <\/a><\/p>\n No. 9: Historic Dana Point home by Hollywoodland developer lists for $2.2 million<\/a><\/p>\n No. 10: Newport Beach waterfront estate with multi-boat dock lists for $58 million<\/a><\/p>\n No. 11: Costa Mesa approves plan to replace Fairview Center with 2,300 new homes <\/a><\/p>\n No. 12: 2-year-old Zia apartment complex sells in Anaheim <\/a><\/p>\n