On the surface, you would be missing out with those numbers, but we have to look at the whole picture. There is no equity gained in a house if you're renting while saving up for a downpayment. Let's look at San Jose vs Des Moines and use the overall median downpayment for comparison.
# Assumptions We'll go a bit conservative here. San Jose developer pay 2k/month more in rent than the Midwest developer.
San Jose developer will earn double the base salary (not a mere 48k/year more as suggested above.)
Outside of housing, the cost of living in both cities is identical at 20k/year. 20k will give you quite a good life in the Midwest as a single person. No idea about the valley.
# Midwest developer living in Des Moines, IA: $80,000/year salary (about 57k after taxes) 2 bedroom apartment in a safe place can be found pretty easily for under $900/month. 1 bedroom for $750 or so. No roommates. Perhaps a 20 minute commute to work.
Rent = $900/month = $10,800/year
Other Living Expenses = $20,000/year
Leftover money = 2,200/month = 26k/year
18 months of saving at that rate to get to the median down payment (39k).
Money sunk into rent before getting any equity in a house: $39,000
# San Jose developer: $160,000/year salary (about 105k after taxes)
Rent = 2,900/month = 34,800
Other Living Expenses = $20,000/year
Leftover money = $4,183/month = $50,200/year
46 months until you have the $192,000 down payment ready, assuming housing prices stay the same.
Money sunk into rent before getting any equity in a house: $133,400
# Result
When the San Jose developer buys a home (assuming the median downpayment didn't go up in those almost 4 years of waiting), the Midwest developer stopped paying rent (11k/year) and was paying down their mortgage with that 11k and the leftover money of 26k/year, totaling 37k/year.
Neglecting mortgage interest because I don't want to calculate that, the Midwest developer put 86k towards the 192k house after the downpayment.
Total equity for Midwest developer: 86k+39k = 125k.
Total equity for San Jose developer: 192k.
Yes, the San Jose developer has more equity in the end, but we also assumed:
* Identical cost of living
* The housing prices in both cities stayed the same until San Jose developer had their 192k. That will be pretty true in the Midwest, but may not be in SV.
San Jose may not have a huge commute, but other areas of SV would. We didn't even look at the fact that the Midwest developer isn't spending 1-2 hours each way going to work (numbers I see cited here frequently).
After tax estimates are based on this calculator: https://smartasset.com/taxes/income-taxes#347zLoGvwJ