Dated: July 27, 2025

This is a topic which keeps coming up and we created a google sheet (customized to California but easy to adapt to other states).

View only sheet:

https://tinyurl.com/buyvsrentca

(You can make a copy and edit the sheet as you wish)

Directly editable public sheet:

https://tinyurl.com/rentvsbuycaedit

(Keep in mind that someone else can overwrite your data)

* It assumes property taxes only go up 2% per year (prop 13)

* It takes into account the federal mortgage tax deduction (750k limit), and CA mortgage tax deduction (1M limit).

* It takes into account the fact that you lose standard deduction but can deduct SALT if you itemize. Supports higher SALT limits from the recently passed bill.

It requires very little data entry and considers two scenarios:

Scenario 1: you buy a house and build home equity

Scenario 2: you rent and instead put down payment money + monthly savings into stocks

 Some Interesting Observation:

* Around 5% property appreciation rate is when the math switches in the favor of buying from renting for a 2M house (assuming 5.5% interest rate and 9% stock returns). If you instead invest in bank deposits / Treasury, buying math will be much more favorable.

* For a 1.25M house, around 4.5% appreciation is enough for the math to switch in favor of buying. This is because a higher percentage of your mortgage will be tax deductible.

* Somewhat counterintuitive: after 10 years or so, buying math becomes LESS favorable compared to stocks. This is because the amount of investment leverage provided by the mortgage goes down and stocks appreciate faster than real estate (even in the bay area). If you want to reverse this dynamic, take a home equity loan and put it in stocks (not recommending this, just explaining).