Joe and Debbie have owned their Mission San Jose home for over 20 years. When a neighboring house similar to their 4-bedroom rancher sold recently for $1.4 million, the couple started thinking it might be time to cash in.

They have long wanted to live in Livermore, and the sale of their home would make the move easy.

But they won’t necessarily buy here. They may decide it’s time to rent.

Their daughter already rents here, paying $1,800 a month for a charming 2-bedroom bungalow in Old North Side. She would love to purchase her own home. Something similar to the house she currently lives in would likely sell for about $450,000.

So who’s right? Is it time to buy or time to rent?

There are a number of factors to consider.

Renting a home offers easy mobility, lack of responsibility for repairs and maintenance, and shelter from possible market volatility.

Homeownership means freedom, stability, pride of ownership, investment in one’s community –the American Dream. Buyers can lock in monthly costs with a fixed-rate mortgage, or at least control increases through the limits imposed on adjustable-rate mortgages.

“Home ownership is still important for the country. It’s the most proven way to build equity and it gives families security,” David Plouffe, former advisor to President Obama and incoming vice president of Uber, said in a recent interview with Realtor Magazine.

“It doesn’t mean it’s right for everybody. We live in an economy where people who are in their 20s are going to have eight or 10 jobs and will move around a lot. It’s different than it was a couple of generations ago, when you bought a home, planted roots, and you were going to be there forever,” he added.

A study last year by Trulia showed a big increase in renters who intend to buy. Those renters cited three top reasons they want to purchase a home:

• 49 percent say they like being able to call themselves homeowners.

• 44 percent say they view homeownership as a good financial investment.

• 36 percent say they need more space for their family and children.

“With homeownership, you have a tax base, good schools, people investing in their community,” Steve Schmidt, an advisor to Sen. John McCain, said in that same Realtor Magazine article. “You’re going to have a tax benefit for owning a home, as far as I can see.”

But what about the bottom line? Is it more economically sensible to rent or to buy?

To calculate the cost of renting vs. purchasing a home we need a little information: estimated purchase price, cost to rent, interest rates on mortgages, homeowner tax deductions, interest rates on savings, how long you expect to live in the home.

In general, the higher average rents are in relation to the price of a home, and the more steeply rents are increasing, the more likely it’s a good time to buy.

According to RealtyTrac, the San Francisco Bay Area is the most expensive real estate region in the country, with a combined median home value of $890,500.

At the same time, the region’s six counties, including Alameda and Contra Costa, are also among the nation’s top 10 most expensive places to rent, averaging more than $2,400 a month.

As of this week, the median list price of a home in Livermore is $631,000. This includes detached homes, condominiums, townhouses and duets, as well as ranches and vineyard properties. For the entire valley – Livermore, Pleasanton and Dublin -- the median goes up to $740,000. Average rents are well into the mid-$2,000s per month.

There are a number of good Rent vs. Buy calculators available online, including those from, Trulia, State Farm, Money Magazine, as well as several government sites.

The New York Times recently created an easy-to-use interactive calculator to determine which is the smarter economic move, based on home prices, typical rents, mortgage interest rates and how long you plan to live in your home.

Other variables, including appreciation of home values and rental costs, are more difficult to predict.

Interestingly, neither the amount of your downpayment nor the length of your mortgage significantly impacts the calculation.

At $631,000, the magic number is $2,548, meaning it is costs about the same to purchase a home for up to $631,000 as to rent the same home for $2,259 a month for six years, according to the NYT calculator. At $740,000, the break-even point is $2,954.

Other calculators give less weight to homeowner tax benefits, and so arrive at different conclusions.

For example,’s calculator figures it would take more like 9 years to break even. Trulia, using a slightly different model, figures breakeven at 6.5 years.

If you plan to move in a few years, those numbers could skew more strongly toward remaining a renter. If you don’t qualify for good mortgage rates, perhaps because of poor credit or lack of job stability, your path toward homeownership may not be so clear cut.

If your financials are strong, and the intangibles of homeownership are important to you, you may weigh those factors more heavily. And, of course, if you believe rents and home prices are likely to continue their upward spiral over the next few years, you’ll want to lock in monthly payments now by purchasing your home.

“Our economy’s changed and our housing market’s changed,” Plouffe said. “But I still think home ownership is, for most people in the long term, a smart financial move.”

If you are trying to decide whether to rent or buy, contact your local Realtor today. He or she can provide all the information you need to make the right decision for your family.

Cher Wollard is a Realtor

with Prudential California Realty, Livermore.