| Buying (cash) | Annual | Renting | Annual |
|---|
Start with the price-to-rent ratio shown next to the price slider — purchase price divided by one year of rent. As a rough rule of thumb, a ratio north of 20 tends to favor renting; under 15 tends to favor buying. Anywhere in between depends heavily on the assumptions below it.
The deciding lever usually isn't the tax or HOA line — it's what the purchase price of capital does instead. Paying cash converts a diversified, liquid portfolio into one illiquid, undiversified asset — the house — betting its appreciation rate against what that money could otherwise earn. Historically, U.S. home prices have appreciated a bit above general inflation (roughly 3-5%/yr long run), while a diversified investment portfolio has done meaningfully better over most 10+ year stretches. That gap, compounded over a decade, tends to dwarf the property-tax-vs-rent comparison people usually focus on.
Watch how the gap changes as you extend the holding period. Because it's driven by a compounding return spread rather than one-time transaction costs, it doesn't necessarily shrink the longer you'd stay — under some assumptions it widens, which runs counter to the usual "buying wins if you stay long enough" intuition. If you'd genuinely keep the cash invested rather than spend it down, and you don't have a strong non-financial pull toward a specific home, the model tends to favor renting once the price-to-rent ratio gets much past the high teens. If space, stability, or a specific property are worth a real premium to you, that's a legitimate reason to buy anyway — just go in knowing you're buying a lifestyle, not necessarily the better investment.
On financing: toggle to "Mortgage" and compare the rate against your investment-return assumption. Financing only clearly helps if you expect your portfolio to beat the mortgage rate by a real margin, or if you'd rather not tie up all your capital in one illiquid asset even when the math is close. On price: at the assumptions above, the break-even offer is around — — the price at which buying and renting roughly tie out over your chosen holding period. That's not a prediction anyone will accept that number, just the line where this specific deal stops being a mathematically worse move than staying put.