We at Movoto Real Estate are always looking for new ways to put perspective on the real estate market. But when we crunched the data on renting vs. buying, we were shocked! In California’s most prominent metro areas renters are paying more each month for their units than homeowners in similar homes.
In a recent analysis, Movoto.com, a leading provider of free access to MLS listings and introductions to top real estate agents, found on average renters are spending $480 more each month than homeowners.
Movoto.com examined the cost effectiveness of buying a home versus renting an apartment in 11 prominent California metro counties: Alameda County, Contra County, El Dorado County, Los Angeles County, Nevada County, Riverside County, San Bernardino County, San Francisco County, San Mateo Country, Santa Clara County, and Yuba County.
The analysis found it was cheaper to buy a home instead of renting in 8 of 11 counties: Alameda County, Contra Costa County, El Dorado County, Los Angeles, Riverside County, San Bernardino County, San Mateo County, and Yuba County were all lower cost to buy a home.
In each of these counties the difference was pronounced. Movoto.com found that versus buying a home:
- Alameda County renters pay an additional $332/month
- Contra Costa County renters pay an additional $905
- El Dorado County renters pay an additional $330
- Los Angeles County renters pay an additional $174
- Riverside County renters pay an additional $867
- San Bernardino County renters pay an additional $507
- San Mateo County renters pay an additional $479
- Yuba County renters pay an additional $248
“The difference in monthly cost is significant,” said Mark Brandemuehl, vice president of Marketing at Movoto.com. “Current renters and future homebuyers should factor this into their housing decision. In this difficult economic time every dollar matters.”
To complete the cost analysis, Movoto.com compared the average monthly mortgage cost and associated taxes of a 3-bedroom, single-family residence to the average monthly cost of renting an apartment. Information on the average monthly rent cost was provided by real estate data and analytic firm Altos Research, which offers the largest housing and apartment rental database in the United States.
The analysis assume a 35 percent marginal income tax rate, a 1.5 percent property tax rate, a 20 percent down payment and a mortgage interest rate of 4 percent. The analysis only compared the current cost of renting to the current monthly cost of buying and does not include the benefit of avoiding future rent increases or gaining property appreciation over the ownership period.
David Cross at Movoto contributed to this report.