Renting vs. Buying Real Estate: See the Cost Difference in 17 California Cities

The drive to head west and stake your claim in a nice piece of real estate is an innately American one. Nothing embodies the dream of homeownership quite like the state of California. However, the decision to rent or buy a home in the Golden State is complex, influenced by high real estate prices, varying rental costs and a competitive housing market.

California’s real estate market is one of the most dynamic and expensive in the United States. Home prices in cities like San Francisco, Los Angeles, and San Diego are among the highest in the nation, driven by demand, limited housing supply and ever-rising interest rates. While these cities offer unmatched cultural and economic opportunities, they also present significant financial challenges when it comes to a home purchase or even a rental agreement.

Renting prices in California are steep and typically require a security deposit, the first and last month‘s rent, and possibly an application fee. These upfront costs are significantly lower than those associated with buying a home. Monthly payments, while high in many parts of the state, include the cost of living in the property without the added burden of property taxes, maintenance, and repairs.

Purchasing a home in California requires a significant financial commitment. The initial costs of buying include a down payment, closing costs, homeowners insurance, repairs, maintenance, and potentially substantial moving expenses. Monthly mortgage payments in California are often higher than rent but contribute to building equity and potentially gaining from property appreciation and tax benefits.

GOBankingRates recently did a study to determine the difference between renting a home and buying one based on factors like the overall cost of living, median household income, average home values, mortgage payments or rental costs.

Here are the key takeaways from these 17 major cities in California.

• Population: 3,881,041
• Household median income: $76,244
• Average home value: $972,829
• Average monthly expenditures: $2,359
• Average monthly mortgage payments: $5,760
• Average monthly rent: $2,870
• Homeowner monthly cost of living: $8,120
• Renter monthly cost of living: $5,229

• Population: 1,383,987
• Household median income: $98,657
• Average home value: $1,031,493
• Average monthly expenditures: $2,171
• Average monthly mortgage payments: $6,108
• Average monthly rent: $3,116
• Homeowner monthly cost of living: $8,279
• Renter monthly cost of living: $5,287

• Population: 1,001,176
• Household median income: $136,010
• Average home value: $1,472,661
• Average monthly expenditures: $2,438
• Average monthly mortgage payments: $8,720
• Average monthly rent: $3,243
• Homeowner monthly cost of living: $11,159
• Renter monthly cost of living: $5,682

• Population: 851,036
• Household median income: $136,689
• Average home value: $1,292,126
• Average monthly expenditures: $2,537
• Average monthly mortgage payments: $7,651
• Average monthly rent: $3,384
• Homeowner monthly cost of living: $10,188
• Renter monthly cost of living: $5,921

• Population: 541,528
• Household median income: $63,001
• Average home value: $386,069
• Average monthly expenditures: $2,033
• Average monthly mortgage payments: $2,286
• Average monthly rent: $1,810
• Homeowner monthly cost of living: $4,319
• Renter monthly cost of living: $3,843

• Population: 523,600
• Household median income: $78,954
• Average home value: $487,136
• Average monthly expenditures: $2,187
• Average monthly mortgage payments: $2,885
• Average monthly rent: $2,174
• Homeowner monthly cost of living: $5,072
• Renter monthly cost of living: $4,361

• Population: 462,293
• Household median income: $78,995
• Average home value: $845,339
• Average monthly expenditures: $2,302
• Average monthly mortgage payments: $5,006
• Average monthly rent: $2,354
• Homeowner monthly cost of living: $7,308
• Renter monthly cost of living: $4,656

• Population: 437,825
• Household median income: $94,389
• Average home value: $794,493
• Average monthly expenditures: $2,303
• Average monthly mortgage payments: $4,704
• Average monthly rent: $2,480
• Homeowner monthly cost of living: $7,007
• Renter monthly cost of living: $4,783

• Population: 404,321
• Household median income: $73,827
• Average home value: $387,759
• Average monthly expenditures: $2,034
• Average monthly mortgage payments: $2,296
• Average monthly rent: $1,938
• Homeowner monthly cost of living: $4,330
• Renter monthly cost of living: $3,972

• Population: 320,030
• Household median income: $71,612
• Average home value: $445,495
• Average monthly expenditures: $2,161
• Average monthly mortgage payments: $2,638
• Average monthly rent: $2,042
• Homeowner monthly cost of living: $4,799
• Renter monthly cost of living: $4,203

• Population: 347,111
• Household median income: $88,538
• Average home value: $919,781
• Average monthly expenditures: $2,126
• Average monthly mortgage payments: $5,446
• Average monthly rent: $2,677
• Homeowner monthly cost of living: $7,573
• Renter monthly cost of living: $4,803

• Population: 316,076
• Household median income: $83,448
• Average home value: $646,244
• Average monthly expenditures: $2,246
• Average monthly mortgage payments: $3,827
• Average monthly rent: $2,451
• Homeowner monthly cost of living: $6,072
• Renter monthly cost of living: $4,696

• Population: 311,379
• Household median income: $84,210
• Average home value: $827,134
• Average monthly expenditures: $2,094
• Average monthly mortgage payments: $4,898
• Average monthly rent: $2,816
• Homeowner monthly cost of living: $6,992
• Renter monthly cost of living: $4,911

• Population: 304,527
• Household median income: $122,948
• Average home value: $1,540,620
• Average monthly expenditures: $2,104
• Average monthly mortgage payments: $9,123
• Average monthly rent: $3,302
• Homeowner monthly cost of living: $11,227
• Renter monthly cost of living: $5,406

• Population: 276,103
• Household median income: $101,984
• Average home value: $860,443
• Average monthly expenditures: $2,207
• Average monthly mortgage payments: $5,095
• Average monthly rent: $3,101
• Homeowner monthly cost of living: $7,302
• Renter monthly cost of living: $5,308

• Population: 225,850
• Household median income: $116,186
• Average home value: $813,187
• Average monthly expenditures: $2,167
• Average monthly mortgage payments: $4,815
• Average monthly rent: $2,866
• Homeowner monthly cost of living: $6,982
• Renter monthly cost of living: $5,033

• Population: 228,795
• Household median income: $169,023
• Average home value: $1,583,878
• Average monthly expenditures: $2,329
• Average monthly mortgage payments: $9,379
• Average monthly rent: $3,141
• Homeowner monthly cost of living: $11,707
• Renter monthly cost of living: $5,470

Methodology: For this study, GOBankingRates found the average cost of living for homeowners and renters in the USA’s largest 100 cities by population. First GOBankingRates found the top 100 cities by population as sourced from the US Census American Community Survey. For each city, a number of factors were found including; total population, total households and household median income all sourced from the US Census American Community Survey. The cost of living indexes were sourced from Sperlings BestPlaces and by using the national average expenditure costs for all residents, as sourced from the Bureau of Labor Statistics Consumer Expenditure Survey for all residents. The single-family home value was sourced from the Zillow Home Value Index and by assuming a 10% downpayment and using the national average 30-year fixed mortgage rate as sourced from the Federal Reserve Economic Data, the average mortgage rate can be calculated. The average rental cost was sourced from the Zillow Observed Rental Index for each city. The average rent cost and average mortgage cost can be used with the average expenditure cost to calculate the total cost of living for renters and homeowners. The cities were ranked to show the cheapest to most expensive cities and then sorted by total population to show the cost of living for homeowners and renters in the top 100 cities by population. All data was collected on and is up to date as of July 15th, 2024.