Research question
Holding the home, rate, appreciation and investment return fixed, how does the rent level change the year that owning becomes cheaper than renting?
Dataset
- A $500,000 home, 20% down, 6.71%, 1.2% tax, 1% maintenance, 3% appreciation, 3% rent growth, 7% investment return.
- Five rent levels from $1,800 to $3,200/month.
- Opportunity cost = the down payment invested at 7% (conservative model).
Methodology
- Run the full-horizon rent-vs-buy model at each rent level.
- Owner net cost = cumulative ownership cost − home equity; renter net = cumulative rent − opportunity cost.
- Break-even year = first year owner net < renter net.
Calculations
| Monthly rent | Break-even year |
|---|---|
| $1,800 | Year 27 |
| $2,200 | Year 19 |
| $2,500 | Year 15 |
| $2,800 | Year 12 |
| $3,200 | Year 9 |
Transparent model; opportunity cost counts only the down payment (conservative toward renting).
Break-even year by rent level
Lower rent pushes break-even later; higher rent pulls it earlier.
$1,800Year 27
$2,200Year 19
$2,500Year 15
$2,800Year 12
$3,200Year 9
Findings
- Break-even is highly sensitive to rent: a higher rent makes owning pay off sooner, lower rent pushes it out.
- When rent is low relative to the ownership cost, the break-even can fall outside a 30-year horizon — the model then reports "30+ years" rather than guessing.
- The result flips with rate and appreciation too; this is why a single national "break-even" number is misleading.
Limitations
- Ignores tax deductions and capital-gains exclusions that can favor owning.
- Assumes the buyer sells at the modelled horizon with no transaction costs.
- Opportunity cost counts only the down payment, not monthly cash differences — conservative toward renting.
Sources
Last updated & change history
Last updated: 2026-09-21
- 2026-09-21 — Initial study.