Analysts point out that California is one of the regions in the United States with the largest disparity between housing mortgage and rent, making it increasingly difficult to buy a home compared to renting.
According to a report by the California Legislative Analyst’s Office (LAO) on April 21, the monthly cost of purchasing a low-priced housing unit compared to renting a similar unit has reached its highest point since the mid-2000s housing market bubble, primarily due to skyrocketing home prices and rising mortgage interest rates.
Joel Kotkin, a urban studies scholar at Chapman University, told Epoch Times that in the past, people used to rent, save money, and then buy a house. But if rents are already high and home prices are even higher, there’s basically no hope. Unless you have inherited wealth or brought funds from overseas, buying a house will become increasingly difficult.
A study released by Bankrate on April 23 also highlights the growing affordability issue in California’s metropolitan areas, with coastal cities leading the nation in the disparity between owning and renting a home. The personal finance information service compared the average monthly rent and mortgage expenses in 50 major metropolitan areas across the U.S., finding that many California cities top the list in homeownership costs, especially when compared to rents.
San Francisco has the largest gap between homeownership and renting costs at 190.7% in the U.S. The average monthly mortgage payment in the area is $8,882, increasing by 4.7% annually, while the monthly rent is $3,055, decreasing by 1.7% annually.
Following closely is San Jose, with homeownership costs exceeding renting costs by 185.6%. The city’s monthly mortgage payment is $9,438, rising by 10.5% annually, while the monthly rent is around $3,305, decreasing by 1.3%.
Los Angeles and San Diego also exhibit similar trends. The homeownership costs in these two major Southern California cities exceed renting costs by 88.5% and 79.9%, ranking them sixth and ninth, respectively, among metropolitan areas in the U.S.
Bankrate’s study indicates that these high homeownership-rent disparities are primarily due to a shortage of housing supply leading to soaring home prices, coupled with the 30-year fixed mortgage rates surging to 6.9% as of the national average on April 24.
Skylar Olsen, Chief Housing Economist at Zillow, stated, “Buying a home in coastal markets is a very long-term financial proposition, Californians typically pass down properties to their children. In these high-price markets, housing tenure is very long, which is one reason.”
According to the LAO citing Zillow data, housing prices in California are about double the national average. In 2025, a mid-priced home in California costs around $789,000, while the national average is $361,000. According to the California Association of Realtors (CAR), the median home price in California was even higher in March 2025, at $884,000.
A report by Zillow in July 2024 revealed that in 117 cities in California, the typical entry-level home price exceeded $1 million. Data from Redfin shows that the median home price in Los Angeles slightly exceeds $1 million, while in San Francisco and San Jose, it surpasses $1.3 million and $1.4 million, respectively.
According to California LAO data, the average monthly rent for a two-bedroom home in California in 2024 was $2,225, far higher than the national average of $1,400.
The California Housing Partnership pointed out in 2024 that in Los Angeles, renters would need to earn $48.04 per hour—approximately 2.9 times the local minimum wage—to afford the average monthly rent of $2,498.
A report by the Public Policy Institute of California (PPIC) indicated that 44% of households in California are renters, higher than the national average of 35%. Aside from two other states, California is one of the states in the U.S. where renters bear the heaviest burden, with many tenants spending over half of their income on rent.
As living costs rise, according to a state-wide survey by PPIC in 2024, 70% of Californians believe that the next generation will be financially worse off than their parents. The survey also revealed that 29% of Californians have cut back on meals or reduced food consumption in the past year, while 17% have used CalFresh (food stamps) and 20% have delayed medical care due to economic hardship.
Mark Schniepp, director of The Economic Forecast, pointed out that the fundamental issue lies in housing. “Apart from building more houses, there’s not much we can do,” he said in an interview with Epoch Times, “but given the current regulations and land zoning policies, it’s challenging to construct enough housing.”
Schniepp identified the Coastal Act, California Environmental Quality Act (CEQA), high land costs, and various local regulations as obstacles to housing development in California.
Urban studies scholar Joel Kotkin also believes that current California policies are leading to a shortage of affordable housing, limiting development in lower-priced areas. He stated, “The most easily approved projects are high-density, expensive developments in downtown areas.”
Kotkin pointed out that owning property is a crucial part of retirement planning. He said, “If you own a home, you can continue to live there after retirement because you have likely paid off the mortgage.”
“Housing is an asset,” he said. “Homeowners can use it as collateral for loans, sell it, and enjoy a more secure retirement life.”
However, he expressed concern that if more and more Californians can only opt for lifelong renting, it could lead to serious social dependency issues. “When people don’t have their own properties, they will rely on the state government or other institutions to take care of them. If they rent throughout their lives and have no assets by retirement, they can only rely on government subsidies.”
“A democratic society is built on the majority having a certain degree of autonomy and independence,” he said. “If you own a property, you have a sense of autonomy, and your mindset may differ from those worried about landlords suddenly raising rents by 50%.”