Study finds renting nearly 200% cheaper than buying in San Francisco, San Jose
While having some of the highest rents in the nation, renting a home in San Francisco and San Jose is nearly 200% cheaper than paying a mortgage for one, a new study finds.
According to Bankrate, San Francisco had the nation's widest gap between average rent and the average mortgage payment over the last two years. While the typical monthly rent was at $3,055 a month, the typical monthly payment on a mortgage was $8,882, a gap of 190.7%.
Also having a similarly wide gap between renting and buying is San Jose, where the typical monthly rent was at $3,305, but the monthly mortgage payment was $9,438. The gap of 185.6% is the second widest in the country.
Rounding out the top five areas with the largest differences between buying and renting are Seattle (119.5%), Denver (96.5%) and Salt Lake City (90.4%).
In California's Central Valley, where many people priced out of the Bay Area market have bought homes, the website also found renting was also significantly cheaper than buying. The typical monthly rent in Sacramento was 56% less than the typical mortgage ($2,310 rent vs. $3,619 mortgage), while renting was 32% cheaper than a mortgage in Fresno ($2,015 rent vs. $2,600 mortgage).
The financial website found that renting a home is cheaper than paying a mortgage in all of the nation's 50 largest metros.
The lowest gap between renting and buying is in Detroit, Michigan, where the typical monthly rent was $1,481 and the typical mortgage payment was $1,515, a gap of only 2.3%.
For it's analysis, Bankrate used Zillow's Observed Rent Index and Redfin's median sale price data from February 2024.
The website also factored in the typical cost of renter's insurance to come up with its monthly rent numbers. For mortgages, the website assumed a 20% down payment, no HOA fees or private mortgage insurance, the average homeowner's insurance rate and average property taxes for a given metro and the national average 30-year-mortgage rate on March 27, which was 7.01%.
Bankrate did not account for other upfront and ongoing costs of buying or renting, such as closing costs, maintenance, rental applications or security deposits.
