Rent vs. buy on the Peninsula

This is the one calculator most agents don't put on their website, because on the Peninsula it frequently says rent. I'd rather you see the real math than a rigged version of it. Every assumption is editable, and the ones that matter most are called out below.

$
$
Per month, for a home you'd actually swap into.
%
%
yrs
The single most important input on this page.
%
Per year. Long-run Bay Area averages have been higher, but past performance guarantees nothing.
%
What your down payment would earn invested instead.
%
Be honest. This assumption changes the answer more than any other.
%
Per year.
%
$
Per year. Renters insurance is far cheaper and is ignored here.
%
Per year, of home value. Older housing stock runs higher.
%
Of purchase price. Typically 1–2% here.
%
Commissions, transfer tax, title, escrow.

Buying

—

Net cost over the period

Upfront cash—
Total paid in—
Equity when you sell—

Renting & investing

—

Net cost over the period

Total rent paid—
Invested along the way—
Portfolio at the end—
—

Why this so often favours renting here

The Peninsula has one of the highest price-to-rent ratios in the country. Divide a $2.5M home by $78,000 of annual rent and you get 32 — meaning the purchase price is 32 times the yearly rent. Anywhere above roughly 20, the math starts leaning toward renting, and above 30 it leans hard.

That does not make buying wrong. It makes buying a decision with reasons beyond the spreadsheet: control over where your children go to school, a payment that stops rising when rents don't, the ability to renovate, and the fact that Proposition 13 caps your assessed-value increases once you're in. None of those show up in a net-cost column.

The assumptions doing the heavy lifting

  • How long you stay. Transaction costs are front-loaded. Under five years, buying rarely wins. Past ten to fifteen, it usually starts to.
  • Whether you actually invest the difference. The renting case assumes you take every dollar you save each month and invest it. Most people spend some of it. The slider above lets you model what you'd really do — set it to 50% and watch the answer move.
  • Appreciation versus investment return. These two numbers are guesses about the future, and small changes swing the result by six figures. Try a few pairs rather than trusting one.

What this deliberately leaves out

No tax treatment. Mortgage interest deduction, the state and local tax cap, and the capital gains exclusion on a primary residence all matter at these price points, and they depend on your specific return. Including a rough guess would make this look more precise than it is. Ask your CPA to run the same scenario with your actual numbers.

Also excluded: rent control where it applies, the risk of having to move on a landlord's timeline, and the possibility that your income or family situation changes. Those are real and they don't reduce to a percentage.

Talk it through with me See what your budget buys

This calculator is an educational model, not financial, tax, or investment advice. I am a licensed REALTOR®, not a financial advisor, lender, or CPA. It relies on assumptions about future returns that no one can know. Do not make a seven-figure decision on the basis of this page alone — use it to frame the question, then confirm with a lender and a tax professional. Austin Schumacher, MBA | REALTOR® · CA DRE# 02229792.