First Time Buyers
Rent or Buy a Home Analysis

There are many advantages to buying a home rather than renting, but there are also a few disadvantages. The primary advantages follow:


  1. Homes in California, historically, have appreciated on average over 3% per year, compounded annually. Given the historical average, for every $100,000 paid for a home today, the same home will be worth $133,037 in 10 years, $154,428 in 15 years, and $240,370 in 30 years. That $400,000 condominium will become worth about $1,000.000 in 30 years. With a fixed rate loan, your loan payment will remain the same for 30 years, at which point, you will own the home free of a mortgage. Of course, many people are able to pay off their loan in 15 to 20 years.
  2. Rents in California, historically, have increased on average over 3% per year, compounded annually. Given the historical average, for every $1,000 paid monthly for rent today, the rent will be $1,330 in 10 years, $1,544 in 15 years, and $2,404 in 30 years. At the end of 30 years, you own nothing but continue to pay rent that has increased two and one-half times.
  3. Interest paid on a real estate loan is almost always 100% tax deductible.
  4. Buying a home creates a forced savings plan as you pay the monthly principal on the loan.
  5. There is no landlord to tell you that you must move out because they are selling the property or a relative is moving in.
  6. You can customize your own home.
  7. Owning a home is the best way to build your credit score and your net worth.
  8. You can borrow against the equity you develop in the property if you want to do so.
  9. Home ownership makes retirement far more comfortable and makes it more realistic to achieve.
  10. Homeowners generally have strong social ties to their community.
  11. Homeowners live in communities that are more stable with more long-term residents.
  12. As a homeowner, you and your entire family will feel more secure.
  13. You will have far more freedom to have pets.
  14. You are likely to live in a safer neighborhood.
  15. You will have a significant asset to leave to your children.


Both FHA and VA loans make it possible for people who think they cannot buy a home to do so. Please read the articles on FHA and VA loans if you want to buy your first home.

The real estate agents with can assist you in buying your first home. Let us help you become a homeowner so you can stop paying rent. See: Buyer's Real Estate Agent.

Rent Paid5 Years10 Years20 Years30 Years


Your Property Could be Increasing in Value

Home prices have increased and have decreased, but historically, over the long run, they have increased substantially. There are, of course, no guarantees that any property you purchase will increase in value, but following are some possible results:


Home Purchase with 2% Annual Increases in Value:



Home Purchase with 4% Annual Increases in Value:



Andrew Carnegie: "Ninety percent of all millionaires become so through owning real estate."


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