We know what the acronym A.S.S.U.M.E. really means, right? Here is a good example: “Renting is cheaper than buying“. Simply assuming that paying rent costs less than making a house payment is ignoring many factors: the interest portion of the principle & interest and, the property tax portion of a house payment are tax deductible. Appreciation also needs to be placed in the equation: rent payments will go up; home values (typically) go up while the house payment remains unchanged.
Would you believe this holds true even in San Francisco, Oakland and San Jose, CA? As the attached article demonstrates, these and other cities have home purchase costs lower than paying rent. In San Jose, CA for example, the difference is 9%.
If the rent vs. house payment debate wins in these large, metropolitan cities, we can assume (oops, here we go again) that the more affordable cities like Morgan Hill, Gilroy and Hollister, CA will have an even bigger difference favoring the purchase of a home vs. renting someone else’s.
Why not take a challenge? Text or email me your city and the amount of rent you pay. I will give your own comparison.