Buy vs rent scenario
Buy vs rent if home prices stay flat
With no price growth, buying has to win on equity from payments and on the rent it avoids.
After 10 years, renting and investing finishes ahead of buying by about $174,013. On these assumptions buying does not overtake renting within 40 years.
Year-by-year results for this scenario
After 10 years, renting and investing finishes ahead of buying by about $174,013. On these assumptions buying does not overtake renting within 40 years. The owner's first-month cash cost is $3,757, compared with $2,325 for the renter.
| Year | Home value | Mortgage balance | Buyer net worth | Renter net worth | Buying minus renting |
|---|---|---|---|---|---|
| 1 | $600,000 | $469,303 | $97,717 | $150,940 | −$53,223 |
| 2 | $600,000 | $458,120 | $109,026 | $176,063 | −$67,037 |
| 3 | $600,000 | $446,428 | $120,850 | $201,757 | −$80,907 |
| 4 | $600,000 | $434,203 | $133,212 | $228,028 | −$94,816 |
| 5 | $600,000 | $421,423 | $150,877 | $254,881 | −$104,004 |
| 10 | $600,000 | $348,248 | $224,052 | $398,065 | −$174,013 |
Questions people ask
Does buying beat renting in this scenario?
After 10 years, renting and investing finishes ahead of buying by about $174,013. On these assumptions buying does not overtake renting within 40 years.
What changes in this scenario?
With no price growth, buying has to win on equity from payments and on the rent it avoids. All other inputs keep the calculator’s default planning values.
Is this a forecast?
No. It is an illustration of how one assumption changes the buy vs rent comparison. Replace the inputs with your own numbers.
Other buy vs rent scenarios
- 5% down, 30-year amortization
- 20% down, ten years
- Five-year stay
- Seven-year stay
- Fifteen-year stay
- Full amortization
- Rates at 6.5%
- Rates at 3.5%
Educational illustration; not advice. See the assumptions.