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Is it better to buy or rent?

Renting vs Buying Graphic
What is better renting or buying?

The Big Question: Is it Better to Rent or Buy a Home? 

Deciding whether to rent or buy a home depends on various personal and financial factors. Here are some key considerations for each option:


  1. Flexibility: Renting offers more flexibility to move without the hassle of selling a home.
  2. Lower Short-Term Costs: Generally, renting involves fewer upfront costs than buying (like down payments).
  3. No Maintenance Responsibilities: Most maintenance issues are handled by the landlord.


  1. Building Equity: Homeownership allows you to build equity over time, which can be financially beneficial in the long run.
  2. Stability: Owning a home provides a sense of stability and permanence.
  3. Potential for Appreciation: There’s a chance your property will increase in value over time.
  4. Tax Benefits: Homeowners often qualify for tax deductions on mortgage interest and property taxes.

Making a Financial Decision

If you are looking for a home for two to five years your investment in a home will almost certainly be the better financial decision right now. 

But don’t take our word for it, here is the proof: 

Let’s assume you want to live in Palm Desert and need a 1,500 square foot, 3 bedroom, 2.5 bathroom home and you want to know what is the better financial option – renting or purchasing a home.

Example Home From
Above Graph Details:
(1,500 SqFt 3 Bed 2.5 Bath)
Price of Home$487,500
Closing Cost (buy side)$20,000 (est.)
Property Taxes1.50%
Down Payment$17,063 (3.5%)
Annual Tax Increase2% /year
Interest Rate7.875%
Home Appreciation/Year5%
Repair/Maintenance Cost$150/mo.
Cost to Sell6% commission
& $20,000
closing costs
Monthly Loan Payment$3,411
Comparable Rent$3,000 /mo.
Rental Increase per year3.25%

This table reflects the cumulative cost of owning a home (including mortgage payments, maintenance, and property taxes, minus the home’s appreciated value and selling costs) compared to the cumulative cost of renting a similar property over the same period.

The table also shows a profit on a home in just 5 years of ownership, even after considering selling costs, the amount spent on loan payments, taxes, and maintenance. Even more interesting is that the cost to buy and sell a home in just 2 years is less expensive than rent. The loss on a home in year 2 would be $37,342, but compare this to the cumulative cost $73,073 to rent for 2 years and the savings becomes clear. This shows a total of over $35,000 less expense with owning a home versus renting.

Of course this data relies on a 5% appreciation, however the price of homes in the Coachella Valley has increased steadily at 5.5% per year in the past 20 years. Also, if you couple a housing shortage (low supply) in California with interest rates declining (increasing demand) you may see another surge in home prices outpacing this 5.5% rate in the next 2 years. 

The fact is; if you are renting a home and plan on staying in the Coachella Valley for more than 2 years, financially it makes more sense to purchase a home rather than renting; even at a 7.875% interest rate!

If you are interested in how to take advantage of this market on the purchase or the sale of a home please call your Keller Williams Coachella Valley expert today at: 760-699-2969

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