Rent or Buy?
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What to watch
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LeverNowBuying wins atGap
Mortgage rateBiggest single lever — also drives prices and your T-bill alternative.6.69%≤ 4.90%-1.79 ptsFavors renting
Home priceA selection trigger, not a timing one — shop it or negotiate it.$1.50M≤ $1.20M-20%Favors renting
Your rentWatch this at renewal — a hike moves the verdict faster than rates do.$5,000≥ $6,277+26%Favors renting
AppreciationUse your own ZIP's 3-yr CAGR here, not the national headline.3.00%≥ 4.16%+1.16 ptsFavors renting
Buying
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Off: you hold or pass it on, so no exit costs come out of equity.
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Renting
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Opportunity Cost
Off: the freed-up cash earns nothing — a pure cash-flow and equity comparison.
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T-bill interest is ordinary income.
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Tax Deduction
Honors the $750K mortgage-interest limit. SALT cap reverts to $10K in 2030.
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Horizon
yrs
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As a Rental
Cap rate, cash-on-cash, DSCR if you bought this and rented it out.
After 10 years
Rent wins
by $203K of net worth
Buying pulls ahead
never*
*within 10 yrs
Own vs rent / mo
$5,310
owning costs more (yr 1)
Price-to-rent
25.0×
favors renting (>21)
Monthly cost of owning · yr 1
Mortgage interest (gone)$6,657
Principal (you keep)$1,078
Property tax (gone)$1,125
Insurance (gone)$200
Maintenance + CapEx (gone)$1,250
HOA (gone)$0
Total carry$10,310
Less: principal you build−$1,078
Less: tax benefit−$625
True cost of owning$8,608
vs. rent$5,000
The setup
Home price$1,500,000
Down payment$300,000 (20%)
Closing costs$30,000
Cash tied up at purchase$330,000
Loan amount$1,200,000
Net worth at year 10
If you buy$852,648
• equity (after sale)$852,648
If you rent + invest$1,055,364
Renting ahead by$202,716
Money you never get back · 10 years
If you own
Mortgage interest$750,360
Property tax$157,266
Insurance$27,513
Maintenance + CapEx$174,740
HOA$0
Closing costs (buy)$30,000
Selling costs (exit)$141,111
Less: tax benefit−$73,018
Total thrown away$1,207,973
If you rent
Rent$687,833
Renters insurance$2,866
Total thrown away$690,699
The difference
Owning wastes more by$517,274
Costs that build no equity. Principal isn’t here (it becomes equity), and neither is the down payment (it’s recoverable, or invested if you rent).
Net worth over time
Same monthly budget for both. The renter starts $330K ahead — the cash buying ties up — and invests it at 3.9%, plus any month renting is cheaper.
The read
At $1,500,000 versus $5,000/mo, over 10 years renting wins by $203K. Owning runs $10,310/mo against $5,000 rent. Buying needs 4.16%/yr appreciation to break even; you’ve assumed 3%.
Pre-tax net-worth model, and it assumes you actually invest the difference rather than spend it. Ignores capital-gains tax on the investments, PMI below 20% down, and the option to refinance — that last one favors buying and isn’t counted. Directional only; confirm with a CPA.