Buy vs Rent Calculator
Compare the long-term financial outcomes of buying versus renting a home. Includes both deterministic analysis and Monte Carlo simulation with historical market data for home prices, rents, mortgage rates, and investment returns.
Suggested rent: ~3-5% of home price
Find the home price where buying breaks even with renting
Buy Net Worth
628,916
Rent Net Worth
1.33M
Buy Advantage
-702,071
Relative Advantage
-52.7%
Breakeven Year
No breakeven
How this comparison works
The calculator tracks two complete balance sheets over your analysis horizon: the buyer pays the mortgage, property tax, maintenance, insurance, and transaction costs while building home equity; the renter pays rent and invests every dollar of difference — including the down payment — at portfolio returns. The verdict is final net worth, deterministic or as a Monte Carlo distribution over historical housing and market data.
The inputs that actually decide it
Four numbers dominate: the price-to-rent ratio, expected home appreciation, investment returns on the renter's portfolio, and how long you stay. High price-to-rent markets (many Chinese and coastal US cities) favor renting; low ratios and long tenures favor buying. Transaction costs mean short stays almost always favor renting.
Breakeven price search
Instead of a yes/no answer, the tool can search for the home price at which buying and renting end up equal — a concrete negotiating anchor. Above that price renting wins; below it buying wins, holding your other assumptions fixed.
Frequently asked questions
- Is buying always better long-term?
- No. With high price-to-rent ratios, meaningful investment returns, or shorter tenures, a disciplined renter who invests the difference frequently ends up wealthier. The answer is genuinely parameter-dependent.
- What price-to-rent ratio favors renting?
- As a rough guide, annual price-to-rent above ~25-30x tends to favor renting; below ~15-20x tends to favor buying. Mortgage rates and expected appreciation shift the line — test your own numbers.
- Does it model leverage correctly?
- Yes. The buyer's returns are levered through the mortgage — small price moves swing equity strongly early on — and the Monte Carlo mode samples correlated housing and market history rather than assuming fixed rates.