Rent Versus Buy: The Arithmetic Nobody Does Properly

Two sentences dominate this conversation and both are wrong. Renting is throwing money away. Buying is always better than renting. Each is a slogan standing in for a calculation that nobody has run, and the calculation is not difficult — it is simply longer than the version people do in their heads.

The comparison is not the mortgage against the rent

The near-universal error is comparing a monthly rent to a monthly principal-and-interest figure, concluding the numbers are close, and stopping there. Owning costs considerably more than the mortgage, and the extra is not optional.

On the ownership side, count all of it:

Principal and interest.
Property tax, which varies enough between neighbouring Massachusetts towns to change the answer at the same purchase price, and which rises. How property tax works here.
Homeowner insurance, which also rises.
Mortgage insurance, where the down payment is under twenty per cent.
The condominium fee, if there is one, which is not escrowed and is easy to leave out.
Maintenance. The line everyone omits. Boilers, roofs, water heaters, and a New England house's particular appetite for attention. It is not zero in a year when nothing breaks; it is an average across years in which things do.
The opportunity cost of the money, which is the one that feels theoretical and is not — the down payment and closing costs would otherwise be invested.

Against that, the ownership side gets credit for the principal portion of each payment, which is yours rather than an expense, and for appreciation, which is real over long periods and is not a straight line.

On the renting side: rent, renter's insurance, and the fact that everything in the maintenance line above is somebody else's problem. Rent rises too.

The transaction costs at both ends, which decide most of it

Here is the part that actually determines the answer, and the part that is almost always left out.

Buying costs money: lender fees, appraisal, attorney, title insurance, recording, prepaid interest and escrow funding, itemised in what a buyer pays at closing. Selling costs more: commission, the deeds excise, attorney, the smoke certificate, Title 5 where there is septic — see what you actually walk away with.

Put the two together and a purchase-and-sale round trip is a meaningful percentage of the price, paid whether the market moved or not. That figure is the hurdle. Everything else in the comparison is arguing about how many years it takes to clear it.

Which makes the first question a question about your life

How long are you staying?

Under about two or three years, renting usually wins on the arithmetic alone, and no amount of appreciation reliably rescues a short hold — you would need the market to move enough to cover both ends of the transaction inside that window, which is a bet rather than a plan. Beyond five to seven years, ownership usually pulls ahead, because the round-trip cost is amortised over more time, the principal portion of each payment grows, and the housing cost stops tracking rent.

Between those, it depends on the specific numbers, and it depends on them enough that guessing is not good enough. Run it. The calculators will take the full monthly figure including taxes and insurance, which is the input people get wrong.

The thing owning actually buys that the spreadsheet cannot price

A fixed-rate mortgage fixes the largest component of your housing cost for thirty years. Rent does not, and over thirty years that difference is enormous — the payment that feels like a stretch today is the one that feels modest in a decade, while rent on the same property will not have stood still.

That is the strongest honest argument for buying and it is worth separating from the weak ones. It is not about appreciation, which is uncertain, and it is not about equity as a forced savings plan, which is real but inefficiently framed. It is about no longer being exposed to the price of housing where you live.

Against it, owning buys immobility. A job in another state, a relationship that ends, a household that grows — each is expensive when you own and trivial when you rent. Two or three years is not long enough to be confident about any of those.

Two Massachusetts-specific factors

Moving in as a renter is not cheap either. First month, last month, a security deposit and a broker fee is a well-known number here and it is close to what some buyers put down. What it costs to move in covers the statutory limits on what may be charged.
The tax picture changed. The mortgage interest deduction only helps if you itemise, and the higher standard deduction plus the cap on state and local tax deductions means a great many owners here take the standard deduction and get no housing-related benefit at all. Assume no tax benefit unless your accountant tells you otherwise; treating it as a given is how a monthly figure quietly gets understated. Federal treatment stated as of 2026.

Where the buy case is strongest

You expect to stay at least five years and can say why.
You have the down payment, the closing costs and reserves afterwards — an empty account on the day you get the keys is how a good decision becomes a bad year.
Your employment is stable and not tied to one office you might leave.
You are buying somewhere you would be content to stay if the market went nowhere for a while.
You are not stretching to the top of what you were approved for. Approval is a ceiling, not a recommendation, and the gap between the two is the margin that absorbs a boiler.

Where renting is the better decision, and not a failure

You might move within a couple of years.
The down payment would leave nothing behind it.
Your income is new, variable or about to change.
You are new to the area and do not yet know which town you want — a year of renting is cheap tuition against buying in the wrong one. The town guides are the place to start narrowing it.
The specific numbers, honestly run for a specific property, say so.

The version worth remembering

Renting buys flexibility and a capped, known monthly cost. Owning buys a fixed housing cost and the eventual end of one, in exchange for transaction costs at both ends, maintenance forever, and the loss of the ability to leave cheaply.

Neither is a mistake. Choosing between them on a slogan is.