TL;DR: Buying isn’t automatically cheaper. What actually decides it is your time horizon, total cost of ownership, and what your down payment could earn elsewhere.
A quick story from New York
When I started looking for a place in New York, every conversation began with the same question: “Isn’t buying smarter than renting?” On paper, a mortgage payment can look close to rent. But once I added closing costs, HOA fees, city taxes, maintenance (hello, pre-war charm), and the fact that my down payment could be compounding in an index fund, the picture changed.
In my neighborhood the price‑to‑rent ratio hovered in the mid‑20s. Over a 3–5 year window, selling costs and carrying costs mattered a lot. The simulator showed that renting was a little ahead at shorter timelines; past 7 years, with modest appreciation, buying started to catch up. Your numbers will be different—but the levers are the same.
The levers that actually move the result
- Time horizon: If you might move in 3–5 years, closing and selling costs loom large.
- Price‑to‑rent ratio: When homes are expensive relative to rent, buying needs more years and/or appreciation to win.
- Opportunity cost: Could your down payment earn more elsewhere (e.g., broad index funds) during your timeline?
What I actually compared (beyond the monthly)
- Upfront: down payment, closing costs, moving, furnishings.
- Ongoing: mortgage P&I, property tax, insurance, HOA, maintenance, utilities.
- One‑off/variable: repairs, renovations, seller credits, selling costs.
- Taxes: mortgage interest deduction (if applicable), property taxes, standard deduction.
- Wealth path: equity build vs. investing the down payment if renting.
Run your scenario in minutes
I plugged my numbers into the tool below to see how rent vs buy affected my net worth over time—including taxes and opportunity cost. You can do the same in a few minutes:
- Start Rent vs Buy → Open Housalyzer’s simulator
- Prefer to estimate a monthly payment first? → Housalyzer’s Mortgage calculator
A simple rule of thumb (gut check)
If you expect to stay fewer than ~5 years or your local price‑to‑rent is above ~25, renting often wins after fees and opportunity cost. But run your numbers—local taxes, HOA, and appreciation can flip the result.
Make the call with confidence
Pick your timeline, appreciation, and investment return assumptions. Then compare cumulative net worth after X years in the simulator and choose the path with the higher after‑cost wealth. That’s how I approached my NYC search—and it turned the decision from fuzzy to clear.
How the search actually felt
Sundays turned into a circuit of open houses from Park Slope to Long Island City. A pre‑war walk‑up charmed me until I learned about a pending roof assessment. A sleek new condo looked easy—until I priced the HOA, tax abatement end date, and closing costs. Even renting had curveballs: broker’s fees on some units, small concessions on others, and utilities that weren’t included.
It wasn’t stressful because the math was hard; it was stressful because every place came with a story the monthly payment didn’t tell you. That’s when I started tracking the “unseen” line items.
The hidden lines that swung the decision
- Closing costs: attorney, title, transfer taxes, mansion tax thresholds—NYC has its quirks. Ballpark a few percent of purchase price going in.
- Selling costs: broker fees plus transfer/closing costs on the way out. If you might move soon, these loom large.
- HOA and maintenance: the monthly fee plus a cushion for special assessments. Old buildings tell beautiful stories and send big invoices.
- Taxes over time: abatements end; rates drift. Model the step‑ups.
- Opportunity cost: the down payment isn’t free—it’s capital that could be compounding elsewhere.
None of these are dealbreakers. They’re just the pieces that make “rent ≈ mortgage” a misleading starting point.
Two paths I modeled (illustrative)
- Buy: a one‑bedroom condo with 20% down, reasonable HOA, and conservative 2–3% annual appreciation. Add typical NYC closing costs upfront and 5–6% to sell later.
- Rent: a comparable apartment, investing the would‑be down payment in a broad index fund, and assuming modest after‑tax returns.
Short horizon (3–5 years): rent pulled ahead once I counted fees and the time to break even on closing costs. Medium horizon (6–8 years): it was close, hinging on appreciation and HOA growth. Long horizon (8–10+ years): buying started to win more consistently, especially with stable fees and modest appreciation.
Your levers may be different—salary growth, roommate offsets, remote work flexibility—but the framework travels well.
What surprised me most
- The down payment’s job: I’d treated it like a sunk requirement, not an investment with an alternative.
- Taxes matter but don’t rescue a bad deal: deductions help, yet they didn’t overcome high all‑in carrying costs.
- Selling friction is real: the cost to exit makes short timelines unforgiving for buyers.
When buying started to make sense for me
Two conditions moved the needle: I could picture staying put at least 7–8 years, and the building’s all‑in fees (HOA + expected maintenance) were predictable enough to model without heroic assumptions. Without both, renting kept a real edge.
If you’re deciding right now
- Start with your likely time horizon. Fewer than ~5 years? Be skeptical of buying unless you have unusually favorable numbers.
- Get your local price‑to‑rent: quick ratio = purchase price ÷ annual rent. Mid‑20s or higher usually means buying needs more years to pull ahead.
- Sanity‑check HOA/maintenance and taxes with worst‑case estimates.
- Give your down payment a job description: what would it earn if you rented?
Then run it, don’t guess:
- Start Rent vs Buy → Open the simulator
- Prefer to estimate a monthly payment first? → Mortgage calculator
Closing thought
The apartment hunt felt emotional until the numbers told a steady story. In NYC, charm and convenience have a price. When I framed the decision as “Which path leaves me with more after‑cost wealth by year X?” the noise dropped away. The simulator won’t choose for you, but it will make the trade‑offs obvious—and that’s what you need to feel confident about whichever key you pick up.
Disclaimer: This is not financial advice. Always consult a qualified professional before making investment decisions.