Is it better to rent or own in California? That depends.

"HOW MONTHLY COSTS COMPARE Key in any housing calculation is monthly cost. Our example estimates California house rent today at $4,000 a month vs. buying a $900,000 house with a 10% down mortgage at 6.5% plus property taxes, insurance, association fees, and repairs. The scenario assumes costs grow with historical inflation and the mortgage rate is lowered twice by a half-point through refinancing."

"Homeowners need to repay their mortgage plus cover a range of additional costs. So renting's total costs run cheaper for nearly two decades. But owning ends up costing slightly less over time. Owning's true financial benefit arises from the increasing value of the home. Assuming historical gains of 5% per year, the owners gets a $3.8 million asset after 30 years. The renter, who hypothetically invested the $90,000 down payment in the stock market, would accumulate $929,000."

Monthly rent is modeled at $4,000 versus purchasing a $900,000 home with 10% down and a 6.5% mortgage plus property taxes, insurance, association fees, and repairs. Costs are projected to rise with historical inflation and the mortgage rate is assumed to fall twice by a half-point via refinancing. Cumulative costs show renting is less expensive for nearly twenty years, while owning becomes slightly cheaper over the full 30-year span. With 5% annual home appreciation, the homeowner ends with roughly $3.8 million in property value; a renter investing the $90,000 down payment in stocks would amass about $929,000.

Read at www.ocregister.com