It would take almost two decades for California rents to reach the monthly financial pain that a homebuyer faces today.
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Tenants are often nudged to buy a home with the notion that owning has relatively fixed costs, while rents are ever-rising.
Well, ownership costs are so out of whack that the homebuying adage may apply. Look what my trusty spreadsheet found in Zillow data on rents and home prices for 50 larger U.S. metropolitan areas, including six in California.
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.
That’s $3,839 in monthly savings for the tenant. How big is that gap?
Let’s 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.
Yes, tenant savings wouldn’t disappear until 2043.
By the way, that estimated payment was calculated based on a purchase at Zillow’s median house value, financed with the average 30-year fixed mortgage rate of 6.9% in September, according to Freddie Mac data. 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.
Nationally speaking
This gap is not just a California thing. Nationally, the savings are there, too – just smaller.
There’s $739 in monthly savings between September’s $1,932 U.S. median rent and the $2,670 estimated house payment on a $366,900 purchase.
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’s cost in September 2026.
U.S. extremes: San Jose is at 36 years while it’s just three years in Pittsburgh.
Metro math
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:
– San Jose: 36 years for the current $7,365 monthly savings to disappear, assuming rents grow at their 3% average annual rate. September’s gap was $3,812 for rent vs. the $11,180 estimated house payment on a $1.5 million purchase.
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– San Francisco: 27 years for $4,790 monthly savings to disappear with rents growing at 3.3%. September’s gap was $3,445 in rent vs. the $8,240 payment on a $1.1 million purchase.
– Los Angeles-Orange County: 20 years for $4,008 monthly savings to disappear with rents growing at 4.3%. September’s gap was $2,929 in rent vs. a $6,940 payment on a $953,000 purchase.
– San Diego: 16 years for $3,801 monthly savings to disappear with rents growing at 5.2%. September’s gap was $2,967 in rent vs. a $6,770 payment on a $930,000 purchase.
– Sacramento: 12 years for $1,914 monthly savings to disappear if rents grow at an average rate of 5.3%. September’s gap was $2,269 in rent vs. $4,180 payment on a $575,000 purchase.
– Inland Empire: 9 years for $1,701 monthly savings to disappear with rents growing at 5.9%. September’s gap was $2,533 in rent vs. $4,230 in payments on a $582,000 purchase.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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September’s most popular Southern California real estate stories …
No. 1: Taco Bell relocating its longtime Irvine headquarters
No. 2: Diane Keaton’s former Laguna Beach flip lists for $10 million
No. 3: What’s the best housing market in Southern California?
No. 4: Dolly Parton’s former Solvang cottage compound lists for $2 million
No. 5: Newport Coast home linked to Latin music star Peso Pluma seeks $14 million
No. 6: Ultra-luxe, ‘overengineered’ beachfront Dana Point estate seeks $65 million
No. 7: California wants more fines against Huntington Beach in housing lawsuit
No. 8: Laguna Cliffs Marriott Resort rebrands amid renovation
No. 9: Historic Dana Point home by Hollywoodland developer lists for $2.2 million
No. 10: Newport Beach waterfront estate with multi-boat dock lists for $58 million
No. 11: Costa Mesa approves plan to replace Fairview Center with 2,300 new homes
No. 12: 2-year-old Zia apartment complex sells in Anaheim
No. 13: California tenants suffered 8th-highest rent hikes in US over four decades
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