If you are a Google ( GOOG) or Facebook ( FB) millionaire, you have your pick of the litter. Most IPO riches get spent on homes in neighborhoods such as Noe Valley where the May-July 2012 median sale price was $1,187,500 and you pay $803 per sq. ft., not in the Outer Mission district where the numbers come in at $510,000 and $364, respectively. The same type of discrepancy exists in Southern California. For instance, within Los Angeles County, it's much more challenging to buy in, say, the famous 90210 zip code (Beverly Hills) at a median sale price of $1,721,500 than it is in 93551 (Palmdale) at $200,000. Even where I live -- in relatively small Santa Monica -- median prices range from $525,000 to $2,317,500 across the city's eight neighborhoods. Ultimately, it comes down to "location, location, location," both in the traditional jargon and in another less-discussed sense I will get into in this series' second article early next week. Simply put, most buy-rent decisions come down to more than just money. Quality of life and how that impacts your overall financial situation can come into play. That's not to say, however, that the numbers are not important. If you want to live in a major city or otherwise expensive real estate market, it's a much more complicated proposition than Trulia makes it out to be. Not only do you have to deal with the choice between desirable Noe Valley, Beverly Hills or Santa Monica and the Outer Mission or Palmdale, you also have to confront the upfront and ongoing costs of home ownership. Before you even discuss the outcomes of buying vs. renting, consider the cost of entry. On a $1,000,000 property, you'll need, at minimum, a $100,000 down payment, though, given the tighter approval environment, you'll likely need $200,000. It takes most of us time to save that kind of money. Once you do, the last thing I would want to do is bring my balance to zero by putting it all toward a down payment on a home. Not only do you go into home ownership without an adequate emergency fund and pool of money for routine and unexpected maintenance, you also buy yourself 30 years worth of a housing payment of thousands of dollars per month that covers not only the home, but interest, property tax and insurance.
You can make considerable income in an expensive real estate market and still not find it easy to get in. In fact, the only way I think I can get in to begin with, feel comfortable being in and be able to reach my other near- and long-term financial goals is to buy an income property that I either rent out completely or live in one unit while renting another one or two. Without somebody else covering all or a significant portion of my mortgage, I'm not sure it would be possible for me, even if I made considerably more money, to comfortably absorb the initial and continuing costs of home ownership, let alone maintain my current quality of life and achieve everything I need or want to achieve going forward. As with most issues related to money and investing, the question of rent vs. buy as well as each person's unique circumstances vis-a-vis home ownership tend to be more complicated than relatively generic studies make them out to be. In the next article in this series, I'll get into the prospect of home ownership as it pertains to location and quality of life. From there, we'll discuss the reasons why different people choose -- or choose not to -- purchase real estate as well as the notion of good debt versus bad debt. At the time of publication, the author was long FB. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.