Renting Is Nearly 200% Cheaper Than Buying In This CA Metro

SAN FRANCISCO — The U.S. city with the biggest price gap between a typical rent and a typical mortgage payment — a nearly 200 percent difference — is in California, according to a recent report from Bankrate.

The personal finance website found that on average rents are cheaper than mortgage payments (with homeowners insurance and property taxes) in all 50 of the country’s biggest metros. The difference between the two grew in all but 12 metros in the last year, Bankrate reported.

“High mortgage and home prices, combined with limited housing inventory, have created a high barrier to entry for aspiring homeowners,” the website said.

“Rising property taxes and homeowners insurance rates are also straining homeowners’ budgets. At the same time, rents have experienced a slowdown in growth and rental inventory has dramatically increased, giving renters more options to choose from.”

In California, the difference is particularly stark.

It costs 190.7 percent more to own in and around San Francisco than it does to rent — $8,882 for a typical mortgage vs. $3,055 for a rental, Bankrate reported — giving the metro the widest cost discrepancy in the nation.

Coming in at No. 2 is San Jose, where the cost difference between owning and renting is 185.6 percent, and a typical mortgage is $9,438 vs. $3,305 to rent, according to the website.

Seattle, Denver and Salt Lake City round out the top five, while Los Angeles is sixth with an 88.5 percent difference in the typical mortgage vs. rent, Bankrate reported. The final California metro to crack the top 10 is San Diego at 79.9 percent.

“ If you’re in the coastal markets, you have to consider this home as a very long-run solution,” Skylar Olsen, Zillow’s chief housing economist, told the website. “In California, people famously leave their homes to their children. There are very long tenures in these really expensive markets for that reason.”

Nationwide, the average mortgage for a median-priced home is $2,768 and the average rent is about $2,000, for a 38 percent cost difference, according to the website.

The mortgage-rent gap is narrowest in the Rust Belt, Bankrate reported, with the cost differences in Detroit, Pittsburgh and Philadelphia coming out to 2.3 percent, 10.3 percent and 11.5 percent, respectively.