Is It Better To Buy Rather Than Rent in California?

California is known for its picturesque beaches and lively cities, making it a desirable place to live. However, with this state’s high cost of living as a first-time buyer in California, you must wonder whether it’s better to rent or buy a home. 

There are many things to consider when deciding which option is cheaper, such as the current state of the housing market, interest rates, and your long-term plans. 

In this article, we’ll delve into the pros and cons of renting versus buying a home in California to help you decide which option is better.

Is Buying Better in California?

Based on Zillow’s data, the median home value in the Golden State is $548,000, which is near twice the national median of $226,000. 

In the past year, home values in the state have increased by 2.2%. However, they are only expected to rise by 0.01% next year.

California’s real estate market is expensive and has experienced modest growth over the past year, with a possible decline on the horizon. However, the decision to buy or rent also depends on the rental market.

If you want to determine how much home you can afford in California, use our mortgage calculator.

Should You Rent in California?

The average rental fee in the Golden State is slightly below $2,600, which is not quite double the national average of $1,486. However, it is increasing every year.

With that in mind, the answer to whether buying or renting is better in California is more complex. It is not merely a matter of general house values and average rental rates. The state is vast with varying price points. Plus, your income and the loan you qualify for also plays a big role.

Your goals should also play a part in deciding whether to buy or rent in California.

Benefits of Buying in California

If you have the financial means, owning a house in California has many benefits, such as:

  • Creating wealth: Each mortgage payment builds your equity and brings you closer to full ownership of the property. If your home’s value increases because of a booming real estate market or desirable house renovations, you could earn a substantial profit if you sell the house.

  • Potential benefit on your FICO score: Unlike rental payments, mortgage payments are usually added to your credit report as reported by your mortgage lender. If you always make your mortgage payments on time, it could increase your FICO score. 

Conclusion

While the decision to rent or buy in the Golden State comes down to individual circumstances, buying a property can offer many long-term advantages, such as building equity and potential financial growth. 

Through careful planning and research, purchasing a home in California can be a wise investment for individuals who are financially prepared for the commitment.

Don’t let California's high cost of living prevent you from making a wise investment. With loans from Nuline Funding, homeownership in California is possible.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.