Year-by-Year Cumulative Comparison
Cumulative cost comparison — $400K home, 6.5%, 10% down, 4% appreciation, 3% rent growth, 7% investment return (illustrative)
| Timeline | Cumulative Buy Cost (PITI+Maint) | Cumulative Rent Cost (+Invested Savings) | Equity Built | Buy Advantage |
|---|---|---|---|---|
| 1 year | $52,000 | $26,000 | $9,000 | −$17,000 (rent wins) |
| 3 years | $108,000 | $78,000 | $32,000 | −$2,000 (rent marginal) |
| 5 years | $165,000 | $130,000 | $58,000 | +$23,000 (buy wins) |
| 10 years | $308,000 | $265,000 | $145,000 | +$102,000 (buy wins) |
| 20 years | $520,000 | $600,000 | $380,000 | +$260,000 (buy wins) |
In most medium-cost markets with 4% appreciation and current rates, the rent vs. buy crossover occurs between years 4 and 6. Before the crossover: renting wins. After: buying compounds its advantage. This is why planning horizon is the most important factor in the decision.
Appreciation Rate’s Effect on the Timeline
How appreciation rate affects break-even and 10-year advantage
| Appreciation Rate | $400K Home After 10 Years | Break-Even Year | 10-Year Buy Advantage |
|---|---|---|---|
| 2% annual | $487,000 | Year 8 | +$18,000 |
| 4% annual | $592,000 | Year 5 | +$102,000 |
| 6% annual | $716,000 | Year 3 | +$200,000 |
The 30-Year Perspective
Over 30 years, buying a $400,000 home at 4% appreciation produces a home worth $1.3 million. Mortgage balance: $0 (paid off). Net equity: $1.3 million. Comparable renter who invested: $42K down payment + $250/mo savings invested 30 years at 7% = $42K growing to $321,000 + $250 monthly growing to $283,000 = $604,000. Buying produces 2× more wealth in this long-run scenario.
Run Your Long-Term Rent vs. Buy Comparison
See the 5, 10, and 20-year wealth comparison for your specific market.