Buy vs rent scenario
Buy vs rent when home prices grow quickly
Leverage amplifies price growth: a 6% rise on the whole home is a much larger return on the down payment.
After 10 years, buying finishes ahead of renting by about $243,374. On these assumptions buying overtakes renting after about 1.9 years, once selling costs are counted.
Year-by-year results for this scenario
After 10 years, buying finishes ahead of renting by about $243,374. On these assumptions buying overtakes renting after about 1.9 years, once selling costs are counted. 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 | $636,000 | $469,303 | $132,205 | $150,940 | −$18,735 |
| 2 | $674,160 | $458,120 | $180,071 | $176,672 | $3,399 |
| 3 | $714,610 | $446,428 | $230,646 | $203,654 | $26,992 |
| 4 | $757,486 | $434,203 | $284,084 | $231,967 | $52,117 |
| 5 | $802,935 | $421,423 | $345,289 | $261,700 | $83,589 |
| 10 | $1,074,509 | $348,248 | $678,632 | $435,257 | $243,374 |
Questions people ask
Does buying beat renting in this scenario?
After 10 years, buying finishes ahead of renting by about $243,374. On these assumptions buying overtakes renting after about 1.9 years, once selling costs are counted.
What changes in this scenario?
Leverage amplifies price growth: a 6% rise on the whole home is a much larger return on the down payment. 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.