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Is it better to buy or rent in today’s market? With high home prices and elevated interest rates, this question is more relevant than ever—especially in prime Southern California communities like Brea, CA. In this analysis, we compare the cost of buying a $1,250,000 home versus renting a comparable property over a 9-year period, assuming:

• Home Price: $1,250,000
• Down Payment: 5%
• Loan Type: Conventional
• Interest Rate: 6.25% (APR 6.397%)
• Forecasted Appreciation: 5.63% annually
• Comparable Monthly Rent: $4,500, increasing 4% annually

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Monthly Mortgage Snapshot

With 95% financing, the loan amount comes to $1,187,500. At 6.25% over 30 years, the monthly principal and interest (P&I) payment is approximately $7,306. Factoring in:

• Property taxes (1.25% of value): $15,625 in Year 1
• Homeowners insurance: ~$1,200/year
• Maintenance (1% of home value): ~$12,500 in Year 1

Your total annual cost in Year 1 would be around $116,000 (or $9,667/month).

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Rent Projection Over 9 Years

Starting at $4,500/month with 4% annual rent growth, rent increases to over $6,000/month by Year 9. Total rent paid over 9 years? Approximately $585,000.

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Buying vs Renting: Cost Breakdown

The chart above shows cumulative costs of buying and renting over 9 years:

• Total Buying Costs (PITI + maintenance): ~$1,020,000
• Total Renting Costs: ~$585,000

But here’s the twist—home equity.

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Home Equity & Appreciation

With a forecasted 5.63% annual appreciation, the home’s projected value after 9 years is approximately $2,079,000. Even after subtracting remaining loan balance and transaction costs (e.g., selling fees), the owner could walk away with $600,000+ in equity, possibly more.

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Conclusion: What’s the Smarter Move?

• Renting offers flexibility and lower upfront costs, but comes with no asset growth.
• Buying has higher monthly expenses, but in Brea’s appreciating market, it builds substantial wealth over time.

Bottom line: If you plan to stay for 7+ years and can comfortably afford the monthly payments, buying wins financially—especially in a high-growth area like Brea.

David Delgado – NMLS #349079
President/CEO
Main Office (866) 587-6927
Freedom Choice Lending
NMLS #1998153