Three of the five most expensive rental markets in the U.S. are in California, including Los Angeles, but data showed that purchasing a home in these areas is even more financially challenging.
According to a January housing cost analysis by Realtor.com, the median rent for a two-bedroom unit in Los Angeles was $2,736, making it the fourth-most expensive rental market in the country. This is over $1,000 more than the national median rent of $1,703 across the 50 largest metro areas.
While some cities offer homeownership as a more affordable alternative to renting, that is not the case in LA. The median monthly mortgage payment in LA stood at $5,687—108% higher than the median rent, meaning homebuyers must pay more than twice the cost of renting.
These figures exclude taxes and insurance costs and assume a 20% down payment with a 6.96% mortgage interest rate. Nationally, the average monthly mortgage payment is $2,123, only 25% higher than the median rent, highlighting the extreme cost disparity in LA.
Experts attribute this gap primarily to high mortgage rates, which significantly impact affordability. Even if home prices drop, rising interest rates can still drive up overall housing costs. Jee Lee, president of Shalom Center, explained, “Skyrocketing home prices are already a challenge, but mortgage rates determine affordability. Given inflation and supply shortages, homeownership conditions are unlikely to improve soon.”
San Jose topped the list of most expensive rental markets, with a median rent of $3,287. However, homeownership was also costlier, with a median mortgage payment of $6,618—101% higher than rent. Similarly, in San Francisco, the median rent is $2,708, while the mortgage cost is $4,604, a 70% difference.
In contrast, New York, the second-most expensive rental market, has a median rent of $2,973, with a median mortgage payment of $3,915—32% higher. Boston ranked third, with a median rent of $2,925 and a mortgage payment of $4,173, making homeownership 43% more expensive than renting.
Only two metro areas in the U.S. currently offer more affordable homeownership than renting: Pittsburgh and Detroit. In Pittsburgh, Pennsylvania, the median mortgage payment was $1,199—15% lower than the median rent. In Detroit, Michigan, homeowners pay a median of $1,252, about 5% less than renters.
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
