Booming housing prices in several California cities have far outpaced rental prices, according to a new analysis by real estate brokerage Redfin.

“It probably doesn’t come as a surprise that there are virtually no homes in the [San Francisco] Bay Area that are cheaper to buy than rent,” the national real estate company reported May 19.

Buying a home in San Jose, Calif., a central hub for tech companies, is 165 percent more expensive each month than renting, according to Redfin. This was the biggest gap among the 50 cities used in the analysis. The median monthly mortgage in San Jose is $11,049, compared to the median monthly rent of $4,176.

Other California cities—San Francisco, Oakland, Anaheim, Los Angeles, San Diego, and Sacramento—also made the top 10 on the list for having higher mortgages than rent prices, according to the report.

In San Francisco, homeowners typically pay 139 percent more on a mortgage payment compared to average rentals. Oakland homeowners pay 99 percent more, and Anaheim pays about 91 percent higher for a mortgage compared to renting.

An apartment development in Anaheim, Calif., on Jan. 8, 2021. (John Fredricks/The Epoch Times)

Housing prices skyrocketed in these cities during the pandemic, but they are now dropping faster than any other region in the U.S., however. In California, existing home sales have dropped about 33 percent since last year, and median prices have fallen nearly 5 percent to $735,480, according to a California Association of Realtors report in March.

In the U.S., only four major cities exist where paying a mortgage is cheaper per month than renting a home.

After analyzing the cost of homes, condos, and townhouses in the nation’s 50 most populous cities, the national real estate company found Detroit, Philadelphia, Cleveland, and Houston were the only cities where it was cheaper to buy than rent a home.

“Buying a home often makes more financial sense than renting if you can afford a down payment and monthly mortgage because you’re building equity,” said Redfin Deputy Chief Economist Taylor Marr in a statement. “But buying isn’t a feasible option for everyone.”

In the cities where it’s cheaper to buy, home values have not increased as much as they have in the rest of the nation. The housing market has cooled this year but experienced rapid cost increases during the COVID-19 pandemic as people relocated.

Housing units in Huntington Beach, Calif., on March 17, 2023. (John Fredricks/The Epoch Times)

Mortgage applications for new home purchases dropped by 11 percent in April 2023 compared to March, according to a Mortgage Bankers Association May 19 press release.

“Since the brief pick-up in new home sales in January when mortgage rates dipped, the pace of new home sales has declined for the three consecutive months,” said Joel Kan, the association’s vice president and deputy chief economist.

In Detroit, the typical home is 24 percent less expensive to buy than rent, which was the largest discount among the cities studied, Redfin reported. The median estimated monthly mortgage payment there is $1,296, compared to the median monthly rent of $1,697.

In Philadelphia, buying a home was 7 percent less expensive each month, followed by Cleveland, where mortgages are 4 percent lower, and Houston, where it costs about 1 percent less for an average mortgage than paying rent.

Nationally, the typical home costs 25 percent more to buy than rent, according to the analysis.

“For homebuying to become cheaper than renting in other parts of the country, mortgage rates would need to fall substantially,” Redfin reported.