Buy or rent? The difference is huge in California

The California dream of homeownership comes at a hefty price – paying at least twice as much more than renting.

Bankrate and Zillow crunched data between the average mortgage payment compared with the average rent in the nation’s 50 largest metros – including six in California – and found that buying costs more than renting. A lot more in California.

Renting is $1,000 cheaper in the Inland Empire (Riverside and San Bernardino counties) than owning, the smallest difference in the Golden State. In the Bay Area, rent is at least $5,250 cheaper than the monthly mortgage payment in San Francisco and San Jose.


The ability to buy a home has almost always been a challenge in California, even with below 3% mortgage rates of a few years ago. 

Fewer than one of every five households could afford to buy a home in California during the first quarter, according to the California Association of Realtors. The figure is one-third the modern-day affordability record reached during the Great Recession, when many home prices were cut in half.

But the bounceback of home prices has been fast and, quite often, furious. Bidding wars and competition for a limited supply of homes on the market in recent years have significantly increased prices. 

And while rents jumped at the beginning of the pandemic, the increases have slowed and, in some areas, declined during the past couple of years.


The difference between buying and renting may never be greater. 

But buyers need to crunch the figures and they should also consider the many benefits of owning a home, including building equity, fixed housing costs (unless you opt for an adjustable-rate mortgage) and tax incentives. Plus, homeowners can remodel without worry.

Now, homeowners also face some costs, like maintenance, repairs and property taxes. And many homes are in homeowner association (HOA) neighborhoods, a fee that can top hundreds of dollars every month.

One other cost that needs to be considered for homeowners now more than ever: Property insurance. Homeowners insurance policies have increased dramatically in recent years, especially in high fire-risk areas in California. 

MetroAverage rentAverage mortgage paymentPremium of owning a home
San Francisco$3,024$8,486+180.7%
San Jose $3,255$8,539+162.3%
Los Angeles$2,920$5,435+86.1%
San Diego$2,965$5,411+82.5%

Source: Bankrate and Zillow

San Diego boasts beauty and beaches, but few renters can buy homes. SHUTTERSTOCK

Are you able to buy a home and spend less than 30% of your income on the mortgage? Don’t worry, few renters can

Very few renters in California are considered “income mortgage-ready,” able to buy a home and keep the monthly payment under 30% of their household income.

Fewer than 4% of renters in the major metro regions of the state could meet that requirement, according to a recent Zillow report. 

California had four of the least “mortgage-ready” major cities nationwide, and five of the worst six cities.


Only 2.6% of renters in San Diego could afford to buy and keep their mortgage payment under 30%, the lowest in the nation, followed by San Jose (2.7%) and Los Angeles (2.8%). 

San Francisco (3.7%) finished at No. 4, while Sacramento – often considered one of the more affordable regions of the state – was slightly better at 4.9%. 

Riverside, an entry-level market for many in Southern California, had the state’s largest percentage of mortgage-ready renters at 5.5%, the ninth-lowest figure in the U.S.

Metro% of mortgage ready buyersNumber of mortgage ready buyers
San Diego2.6%16,500
San Jose2.7%9,800
Los Angeles2.8%76,800
San Francisco3.7%36,100

Source: Zillow


Zillow also determined that only 193,000 households combined in those six cities are mortgage-ready, the equivalent of the population in Huntington Beach.

Of course, many Californians can buy a home by exceeding the 30% threshold, thanks to excellent credit scores and less debt.

Nationwide, Pittsburgh boasts the most mortgage-ready renters at 25.6%, followed by Detroit and St. Louis. All three of those cities have an average household income of about $93,000.

More than 19,000 homes entered foreclosure in California during the first half of the year. FLICKR

Foreclosures increase but no need to worry, really

Foreclosures increased in seven of 10 markets in California during the first half of the year in California, bucking a national trend.

But before you begin to dream of deeply discounted home prices, the foreclosure gains are minimal – and a fraction of homes that went back to lenders during the peak of the Great Recession, according to ATTOM Data.

California had about 19,000 homes enter some form of the foreclosure process – default notices, scheduled auctions or bank repossessions – during the first six months of the year, a 6.1% increase compared to the same period in 2023. Foreclosures are up 16.4% from the first half of 2022, when pandemic protections started to ease.


Los Angeles and the Inland Empire accounted for almost half of the foreclosures filed in the state, with Los Angeles-Long Beach leading the way at 5,375, a barely noticeable 1.4% gain compared to the same six-month period in 2023 (see table, below). But the figure pales compared to the Los Angeles-area record of 106,105 foreclosures in the first half of 2009.

There are a few noticeable percentage increases during the first half of the year, such as 24% in Fresno and 18% in Bakersfield. Stockton and Sacramento foreclosures were each up more than 14%.

But, again, the figures are far from the records reached during the housing market collapse during the Great Recession. 

In comparison, Riverside, Sacramento and Stockton had a combined 101,000 foreclosures during the first half of 2008 – about five times more than the foreclosures statewide for the first six months of this year.


There are a couple of reasons for the near record-low foreclosures during the past few years.

The California Mortgage Relief Program, an $800 million federally funded effort to help homeowners affected by the COVID pandemic, has helped more than 33,000 homeowners avoid foreclosure during the past couple of years. The program stopped accepting applications a few months ago.

But the primary reason for few foreclosures comes down to higher home prices. 

A majority of Californians with a mortgage – about three of every five – are considered equity rich, where they have more equity than the money owed on their mortgage. So, many homeowners behind on mortgage payments can simply sell their house, enjoy a decent-to-great profit and move on to renting.

Nationwide, about 177,400 homes entered the foreclosure process during the first six months of the year, a 4.4% drop from the same period in 2023.

“These shifts could suggest a potential stabilization in the housing market,” says ATTOM CEO Rob Barber. “However, monitoring these evolving patterns remains crucial to understanding the full impact on the real estate sector.”

MetroNumber of foreclosures in the first half of ’24Foreclosures compared to first-half ’23
Los Angeles5,375+1.4%
Riverside-San Bernardino3,495+5.2%
San Diego879-22.2%
San Francisco1,950+12.3%
San Jose427-3.0%

Source: ATTOM Data


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