Rent vs Buy in Palo Alto>Question Details

Palo, Other/Just Looking in Palo Alto, CA

rent vs own in Palo Alto CA

Asked by Palo, Palo Alto, CA Fri Oct 8, 2010

Help the community by answering this question:


Elena Talis’ answer
See my partner's article in Palo Alto Patch - It is definitely personal choice to buy or to rent but with current market run up, it seems that buying will fix your housing cost for the foreseeable future.
0 votes Thank Flag Link Fri Apr 6, 2012
Hi Palo,

Here is a Rent vs. Own calculator:…

But honestly, most people who buy in Palo Alto do so not becuase they think it's a great investment that will pay off in 5 years, but because they LIKE the area and LIKE the idea of owning their living space. And even if it takes years before the investment begins to pay off, they get the immediate benefits of a nice neighborhood, sense of community, larger space, garden, etc.

Regarding the Palo Alto market being "different"... well technically speaking, every city is different;) If you want to sift through the sales hype and look at actuall price figures, check out this link:…

I hope this helps! If you DO decide that it's time to buy, let me know and we can go check out some properties.

Realtor, Short Sale Specialist
3 votes Thank Flag Link Thu Feb 17, 2011
You can do your own research if you don't believe me, but to think that Palo Alto real estate has the same characteristics as Vallejo, Stockton, or wherever is simply uninformed and naive.
1 vote Thank Flag Link Fri Oct 29, 2010
Right now the inventory of homes for sale (26 single family) as well as the inventory of rental properties is so low it is very difficult to do either one. Hopefully things will improve in the next few months.
Web Reference:
0 votes Thank Flag Link Wed Jan 11, 2012
Most contributors tried to provide information in a factual fashion, therefore let me try to provide a bit of grapevine chatter.

Historically Palo Alto houses have appreciated well. It is true that to begin with, buying a house in Palo Alto by paying exorbitant prices makes no sense when you compare it to the average rental rate. However, if you toured available rental properties and for-sale properties, you will see that rentals are in quite a bad shape. Average rent is lower than average mortgage payment but average rental shows a lot more badly than average for-sale property. Rentals that are attractive have expensive tags too, and the difference narrows. Also, rents have climbed crazily and current rental market is super hot.

Also, I know people who were asked to vacate their rental by their landlords for reasons (mostly legitimate) such as landlord wanting to move back, wanting to tear down the property etc. Therefore there is no sense of permanency for a long time horizon. Especially if you want to live in Palo Alto due to your kids schools, you will realize that you plan to be there for 5-10 years and it is rare that you will continue living in the same property, although possible.

Conversely, if you do choose to own, you have the option of improving the property, typically do not have to vacate it forcibly (assuming no financial hardship), and within approximately 10 years or so, the property will be in a state where you can get higher rent for it than your mortgage + property taxes. Now, I have no numbers to prove it as a general case but I have my experience and experience of friends and neighbors; no guarantees for the future. You can bring down this horizon by making aggressive payments to your mortgage.
0 votes Thank Flag Link Tue Jan 10, 2012
jonp, i believe toothfairy is asking you to compare palo alto and atherton.

how 'different' are they?
0 votes Thank Flag Link Thu Apr 7, 2011
Good question. From 2006 thru 2009 it was better to be a renter in Northern California. The average home droped in value as much as 50 percent in value in that time period.
However, today with interest rates in the 4 percent range and FHA loans with 3 percent down payments it makes sense to buy. You can buy a home in Solano county for less than you would pay in rent for the same home.
Web Reference:
0 votes Thank Flag Link Fri Oct 29, 2010
If you don't care enough to do your research via infinite number of real estate web sites and articles out there, and just be a couch potato, then fine.

Just don't confuse your personal laziness with thinking that a stated conclusion must therefore be wrong.
0 votes Thank Flag Link Fri Oct 29, 2010
I see you've one-upped the real estate agents who just demur when asked for data to support their rosy claims about how special Palo Alto is. Thanks for the anonymous personal attack. Very helpful.
0 votes Thank Flag Link Fri Oct 29, 2010
Jon, what a line: "but Palo Alto is different". Do you honestly believe that? Every agent in every town tries to convince potential buyers that "__________ is different." But when you push them for stats they'll demur. I challenge anyone to provide apples-to-apples statistical evidence that Palo Alto has done better than other towns in the area at any given price range. And please no vague anecdotes about how your neighbors/parents/friends bought in Palo Alto years ago and have now retired to a private island they bought in Tahiti with their astonishing real estate profits. As a homeowner living here for many years, it just ain't so.
0 votes Thank Flag Link Thu Oct 28, 2010
Just because most real estate agents will tell you to buy instead of rent, there is nothing wrong with that. Just recognize they have a personal incentive and keep open-minded.

At the end of the day, YOU have to make your own determination, based on your own risk tolerance level and your individual financial situation. The NY Times rent vs. buy calculator is the very best I've seen.

Here is my perspective. Given current conditions, if you have the financial means AND you have a long term horizon (at least 7 years) AND you find a house you really love, then buying makes sense to me, especially in a premier town like Palo Alto. I'm not so sure about
Redwood City or Stockton or Vallejo, but Palo Alto is different.
0 votes Thank Flag Link Sun Oct 24, 2010

Most agents will tell you to buy.. That's how they make money.
0 votes Thank Flag Link Fri Oct 22, 2010
What size house do you plan to buy? rent? Whats your income? What part of Palo Alto? Palo you need more info on you can get your Palo help...
0 votes Thank Flag Link Sun Oct 10, 2010
It is less expensive to rent than to own in Palo Alto as far as cash flow right now. However, this may or may not be true in the future. With todays low interest rates and the upward pressure on rents, in the future it may be that if you buy today then some number of years in the future owning may be less expensive renting that same home. However, the real payoff comes when the loan is paid off. If you buy a home with a 30 year fixed rate loan, or even better a 15 year fixed rate loan, then after the loan is paid off you get to live in the house with no mortgage payment, rent it out for cash flow, or give it to an heir, none of which can be done if you rent. You will also most likely have some excellent appreciation if you hold on to the home for the duration of the loan. There are also personal life style issues involved in renting vs buying that coan only be assessed by the individual.
Web Reference:
0 votes Thank Flag Link Sun Oct 10, 2010
There are actually numerous "Rent vs. Buy" calculators online. You will find that the criteria (input variables) differ among them. One useful exercise would be to experiment with several of the different calculators and see how you come out, using different criteria. Just Google "Rent vs. Buy" to get started.

FYI, "bread and butter" Palo Alto properties have been holding their value quite well, relative to other cities in the area.

Ultimately, of course, as others have been saying, it's a personal decision based on your own individual considerations. Certainly, if you don't plan to live in the house for at least a few years, "costs of sale" may put you in the negative when you sell.


Daniel Berman
Pacific Century Realty
Buyer Rebates Up to 50%
Listing Commissions as Low as 1%
0 votes Thank Flag Link Fri Oct 8, 2010
A decision only you can make based on your finances, wants, needs, lifestyle, lenght of time, etc., It’s all about costs and lifestyle. Costs—financing v. moving-in, mortgage v. rent, repairs v. upkeep. Lifestyle—stability v. mobility, predictability v. flexibility, equity v. freedom from debt. It used to be all about equity. Now, there are other variables to consider in the balancing of the buy/rent equation.
0 votes Thank Flag Link Fri Oct 8, 2010
Usually, it is better to own that to rent if you are going to stay in your home for at least 5 years. - or at least, it used to be like this when the market was "normal".
Since the cost of selling is roughly around 7.2 %, you need to have that kind of appreciation in order not to loose any money. Of course, this is without counting the tax advantages of owning.
I hope this helps!
Web Reference:
0 votes Thank Flag Link Fri Oct 8, 2010
Depends on your goals and finances. There is a rent vs own analyzer on line which may assist you with the financial aspect.
Web Reference:
0 votes Thank Flag Link Fri Oct 8, 2010
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer