California Buy vs Rent Calculator

May 23, 2025

Calculator

Real Estate

California

Prop 13

Rent Control

Why California is Different

Understanding the unique protections that shape California's housing market

Proposition 13: The Homeowner's Advantage

California's Proposition 13, passed in 1978, fundamentally changes the buy vs. rent calculation by capping annual property tax increases at just 2% per year, regardless of how much your home appreciates in value. This means that while your neighbor's rent might double over a decade, your property taxes remain predictably low. For homeowners, this creates a massive long-term financial advantage that compounds over time—especially in high-appreciation areas like the Bay Area and Los Angeles.

Renter Protections: AB 1482 and Local Controls

California also provides significant protections for renters through the Tenant Protection Act (AB 1482), which applies statewide to most rental properties built more than 15 years ago. This law caps annual rent increases at 5% plus local inflation, with a maximum of 10% per year. This protection helps moderate rent growth compared to other states with no rent control.

San Francisco Example: Enhanced Rent Control

San Francisco goes even further with its own rent control ordinance. For buildings constructed before June 13, 1979, annual rent increases are typically limited to around 60% of the Bay Area Consumer Price Index (CPI)—often resulting in increases of just 2-3% per year. The city also requires "just cause" for evictions and provides additional tenant protections. This means long-term renters in older San Francisco buildings can maintain relatively stable housing costs, significantly altering the financial comparison with buying.

How Our Calculator Accounts for California's Unique Market

Our calculator specifically models these California advantages: Prop 13's property tax caps are built into the buying calculations, while the rent increase inputs allow you to model the moderate rent growth typically seen under AB 1482 protections. For San Francisco residents, you can input even lower rent increase rates (2-3%) to reflect the city's additional rent control protections for older buildings.

Calculator Inputs

Adjust the values below to match your specific situation

Buying

Renting

Investment

Tax Benefits

Time Horizon

10 years

1 year 15 years 30 years

Results: Buy vs. Rent in California

Based on your inputs over a 10 year period

Buying a Home

Monthly Cost: $5,514.88

Monthly Tax Savings: $1,354.19

Effective Monthly Cost: $4,160.69

Total Cost (over 10 years): $515,283.30

Home Equity after 10 years: $570,576.49

Equity Breakdown:

Initial Down Payment: $160,000.00

Principal Paid Over 10 Years: $97,432.79

Home Appreciation: $384,195.43

Closing Costs: $16,000.00

Selling Costs: $71,051.73

Total Interest Paid: $387,995.45

Net Financial Position: $55,293.19

Renting

Monthly Cost: $3,025.00

Total Cost (over 10 years): $415,699.66

Investment Breakdown:

Down Payment Invested: $314,744.22

Monthly Savings Invested: $123,188.47

Total Investment Value after 10 years: $437,932.69

Net Financial Position: $22,233.03

Recommendation

Buying is financially advantageous by approximately $33,060.16 over 10 years based on your inputs. Both California's Prop 13 property tax protection (saving you from rapid tax increases) and the tax deductions for mortgage interest and property taxes contribute significantly to this advantage.

30-Year Financial Comparison

This interactive chart shows the projected net financial position over 30 years for both buying and renting scenarios. Hover over data points to see detailed values. The comparison is based on your specific inputs and current financial conditions.

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