The Cost to Buy vs Rent in California

It’s not news: the Golden State isn’t cheap. In some cities, you’ll spend $6,000 per month more to buy a home than rent one.

Still, people are buying and home prices keep going up. Plus, the allure of California has enticed residents to buy homes despite high prices for decades.

But not every locale is expensive. There are still affordable pockets in the state.

Ready to become a California homeowner? These cities might be a good place to start looking.

Start your California home pre-approval.

Monthly Cost Difference to Buy

1. Los Angeles +$3,163
2. San Diego +$3,942
3. San Jose +$6,359
4. San Francisco +$6,274
5. Sacramento +$1,043
6. Fresno +$635
7. Bakersfield +$1,007
8. Stockton +$668
9. Modesto +$1,033
10. Redding +$1,139

1. Los Angeles

One of Earth’s largest cities, Los Angeles has experienced a housing crunch ever since most Californians can remember. But it’s not the most expensive city by a long shot. Some California towns require monthly payments of well over $25,000. Still, to own a home in Los Angeles, it could cost about $3,000 additional per month compared to renting.

2. San Diego

At over $1 million, owning the typical San Diego home costs about double what it does to rent. That’s not deterring buyers, though. Home prices are up over 8% in the past year says Zillow, at a time when mortgage rates are at multi-decade highs.

3. San Jose

Plaza de Cesar Chavez, San Jose, California

Near the home of Google, Apple, Netflix, and other Silicon Valley giants is San Jose. The city’s home prices reflect available incomes in the area. While rent isn’t cheap, it’s comparatively more affordable: around $6,000 less per month.

4. San Francisco

Hitting a high of $1.45 million in May 2022, SF home prices are on their way down, according to Zillow. The population dropped 7.2% the first year of COVID, says Newsweek, and “rampant homelessness, a drug crisis, surging crime and several business closures” are taking their toll on the city. Is this a buying opportunity or just the beginning of a longer slide? An eventual turnaround could mean that homes are nearing bargain prices – at least in terms of a large California city.

5. Sacramento

One of the more affordable cities on the list is Sacramento. While near $500,000, the typical home is less than half of what they cost in other locales. Buying a home will cost around $1,000 more per month than renting, a good deal compared the first four cities on our list.

6. Fresno

The most affordable market on our list, Fresno home prices are well under $400,000. America’s fruit basket, the city offers employment opportunities in agriculture and adjacent industries.

7. Bakersfield

About two hours north of Los Angeles is Bakersfield, a hotspot for agriculture and oil production. After peaking in August 2022, home prices dipped briefly in 2023 before rising and eclipsing previous highs.

8. Stockton

You can still find starter homes in Stockton. While prices are around $430,000 for a single-family home, smaller homes are available, such as a 2-bed, 1-bath home of 1,300 square feet currently listed for $299,000.

9. Modesto

Home prices in Modesto are off their 2022 highs, says Zillow, but nearly half of all homes sell for over list price. It takes just 17 days for a home to go under contract on average, showing that this is an in-demand market.

10. Redding

A NorCal gem, Redding is your destination for adventure, offering easy access to the Sacramento River National Recreation Trail, Shasta Lake, and Whiskeytown National Recreation Area. And with prices under $400,000 – a rarity for a California city – you’ll have money left over each month with which to explore.

Get Pre-Approved for Your California Home

Homes in California can be affordable for some buyers despite high price tags in many areas. See what home price you qualify for by requesting your pre-approval from a California lender.

Start your California home pre-approval.

Methodology

To compare the costs of buying versus renting in 10 California cities, we started with typical home prices as reported on the Zillow Home Value Index (ZHVI) Single-Family Home Time Series for November 2023. We assumed a 5% down payment, the typical requirement for first-time buyers. We then calculated the monthly payment on a 30-year fixed mortgage using a 6.845% rate, the average rate at the time of data collection as published on Optimal Blue Mortgage Market Indices for a buyer with less than 20% down and a 700 FICO score. We added PMI costs per rates from mortgage insurance provider MGIC. Then we added annual homeowner’s insurance premiums as reported by Policygenius and property tax data from Roofstock and the U.S. Census Bureau. We assumed zero HOA dues. We compared this total housing payment with rent data from the Zillow Observed Rent Index (ZORI) Smoothed Single Family Residence Time Series except when no data was available, in which case we searched for current rent statistics on Zillow’s site. City selection was based on the highest population except where it made sense to bypass a suburb of a major city to highlight one in a different area.