San Jose has emerged as the top city for renters, largely due to its favorable home price-to-rent ratio, even though renting here poses its own financial hurdles.

According to a report from real estate website Clever, San Jose ranks among the most expensive cities for both purchasing and renting in the top 50 metropolitan areas across the U.S. The median home price in San Jose is approximately $1.5 million, while the median rent reaches around $3,331 per month. In comparison, San Francisco follows with a median home price of $1.1 million, making it the second most expensive city for home buying, with Los Angeles trailing at $925,000.

The study delved into the cost-effectiveness of renting versus buying a home. San Jose was recognized as the best city for renting because of its advantageous home price-to-rent ratio. Conversely, Cleveland, Ohio, stands out as the city where buying a home is most financially viable, showcasing a median home price of just $187,413 and median rent at $1,416.

Michelle Perry, president of the Santa Clara County Association of Realtors, has observed a significant influx of people moving to Silicon Valley from various states and countries over the last decade, eager to purchase homes. Meanwhile, she noted that local residents are increasingly struggling to afford such purchases.

Brett Caviness, a local realtor and former president of the Silicon Valley Association of Realtors, underscores the importance of renting while viewing homeownership as a long-term commitment. He remarked that although he can’t specifically comment on the rental market, renters’ needs differ greatly from those of buyers. Renters often look for short-term, cost-effective solutions, while buyers focus on long-term investments.

Residents of Silicon Valley are facing the challenges of a high cost of living, as the region holds the distinction of having the highest rent in the nation and the second-highest home prices, perpetuating a housing affordability crisis. The 2024 Silicon Valley Pain Index highlights significant wealth inequality, with just nine families holding $110 billion in liquid assets—twelve times the amount of the bottom 50% of families in the area.

Scott Myers-Lipton, a sociology professor emeritus at San Jose State University and co-author of the Pain Index, pointed out that homeownership has become nearly impossible for many. He referenced a report from the California Association of Realtors stating that only 20% of families in Santa Clara County can afford the median home price.

Myers-Lipton emphasized that, in the current U.S. landscape, owning a home is still seen as the American Dream. While this was more attainable in the past, it’s now out of reach for most people. He called for “bold” solutions to tackle housing affordability, suggesting policies similar to the G.I. Bill for World War II veterans, which successfully helped veterans purchase homes and spurred the rise of the modern middle class. He believes that similar strategies could benefit all Americans today.

Caviness noted that many first-time homebuyers remain actively in the market, encouraging potential buyers to investigate financing options. He pointed out a common misconception: individuals often assume they need to provide a 20% down payment. In reality, he has encountered financing plans that allow for down payments as low as 3% to 5%. While he acknowledges that homeownership may not suit everyone, he argues that it can be more accessible than many think for those who view it as a long-term investment.