15 California Cities Where It’s Cheaper To Rent Than To Own

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It’s shaping up to be a big year for the real estate market, as millions of homebuyers prepare to make the big move, both physically and financially. But is buying a home always the best choice for your wealth? Renting gets a bad rap overall — because there’s no investment aspect — but research has shown that renting can be a lot cheaper than owning, and there are some cities in the U.S. where that fact is overwhelmingly apparent.  

With owning a home, you’ve got to navigate a number of hefty expenses. The down payment, the mortgage loan interest rates, property taxes, home insurance and maintenance costs.In California, the second most expensive state in the U.S. (Hawaii takes first place), these costs can potentially wipe out your wealth or hold you back from building it. 

In a new study, GOBankingRates analyzed rental and mortgage costs to find the cities in California where it is cheaper to rent than to own. These are the top 15 cities in California where renting is indeed cheaper than owning.

15. Laguna Beach

• Average single-family home value: $3,030,556  
• Monthly average mortgage cost: $15,919  
• Monthly average rent cost: $5,885    
• Monthly savings by renting instead of owning: $10,034  

14. Los Gatos

• Average single-family home value: $2,678,145  
• Monthly average mortgage cost: $14,068  
• Monthly average rent cost: $3,709     
• Monthly savings by renting instead of owning: $10,358  

13. Kentfield

• Average single-family home value: $2,531,934 
• Monthly average mortgage cost: $13,300 
• Monthly average rent cost: $2,652  
• Monthly savings by renting instead of owning: $10,648  

12. Menlo Park

• Average single-family home value: $2,797,515 
• Monthly average mortgage cost: $14,695  
• Monthly average rent cost: $3,836     
• Monthly savings by renting instead of owning: $10,859  

11. Tiburon

• Average single-family home value: $3,110,447  
• Monthly average mortgage cost: $16,338 
• Monthly average rent cost: $5,268     
• Monthly savings by renting instead of owning: $11,071  

10. Burlingame

• Average single-family home value: $2,675,935  
• Monthly average mortgage cost: $14,056  
• Monthly average rent cost: $2,953     
• Monthly savings by renting instead of owning: $11,103  

9. Rancho Santa Fe

• Average single-family home value: $4,227,376  
• Monthly average mortgage cost: $22,205  
• Monthly average rent cost: $9,750     
• Monthly savings by renting instead of owning: $12,455  

8. Cupertino

• Average single-family home value: $3,169,743 
• Monthly average mortgage cost: $16,650  
• Monthly average rent cost: $3,904     
• Monthly savings by renting instead of owning: $12,746  

7. Del Mar

• Average single-family home value: $3,958,547  
• Monthly average mortgage cost: $20,793  
• Monthly average rent cost: $5,800     
• Monthly savings by renting instead of owning: $14,993  

6. Montecito

• Average single-family home value: $5,359,579  
• Monthly average mortgage cost: $28,153  
• Monthly average rent cost: $12,782     
• Monthly savings by renting instead of owning: $15,371  

5. Los Altos

• Average single-family home value: $4,412,130  
• Monthly average mortgage cost: $23,176  
• Monthly average rent cost: $7,364    
• Monthly savings by renting instead of owning: $15,811  

4. Newport Beach

• Average single-family home value: $3,821,225  
• Monthly average mortgage cost: $20,072  
• Monthly average rent cost: $4,108     
• Monthly savings by renting instead of owning: $15,964  

3. Palo Alto

• Average single-family home value: $3,717,647  
• Monthly average mortgage cost: $19,528 
• Monthly average rent cost: $3,380  
• Monthly savings by renting instead of owning: $16,148  

2. Saratoga

• Average single-family home value: $3,991,701
• Monthly average mortgage cost: $20,967  
• Monthly average rent cost: $4,674  
• Monthly savings by renting instead of owning: $16,294 

1. Beverly Hills

• Average single-family home value: $5,287,737  
• Monthly average mortgage cost: $27,775  
• Monthly average rent cost: $4,284    
• Monthly savings by renting instead of owning: $23,491  

Methodology: For this study, GOBankingRates analyzed cities in California to find places where it is cheaper to rent than to own. First, GOBankingRates identified cities in those states with an average single-family home value as well as an average rental cost. Assuming a 10% down payment and using the national average 30-year fixed mortgage rate of 6.87%, as sourced from the Federal Reserve Economic Data from Feb. 13, 2025, the average mortgage cost can be calculated for each city. The cities with a lower average rental cost than average mortgage were kept for this study. For each location a number of factors were found including; total population, population ages 65 and over, total households, and household median income all sourced from the U.S. Census American Community Survey. Using this data the percentage of the population ages 65 and over can be calculated. The cost of living indexes were sourced from Sperling’s BestPlaces and include the grocery, healthcare, housing, utilities, transportation, and miscellaneous cost of living indexes. Using the cost of living indexes and the national average expenditure costs, as sourced from the Bureau of Labor Statistics Consumer Expenditure Survey, the average expenditure cost for each location can be calculated. The livability index was sourced from AreaVibes for each location and included as supplemental information. Using the average mortgage and average expenditure costs, the average total monthly and annual cost of living can be calculated. The difference of rent from mortgage can be calculated and the cities were sorted to show the largest savings when someone is paying rent versus mortgage. All data was collected on and is up to date as of Feb. 19, 2025.

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