Rent vs. Buy: Three Worked Scenarios Over 5, 10, and 20 Years
Using the same starting numbers, a 5-year horizon commonly favors renting once closing and moving costs are factored in, a 10-year horizon is often close to a toss-up depending on local appreciation, and a 20-year horizon typically favors buying, as accumulated equity and appreciation outweigh the upfront costs. The exact crossover point depends heavily on local market conditions.
The rent-vs-buy answer changes more with time horizon than almost any other single input — running the same numbers at three different horizons makes that shift concrete instead of abstract.
The setup
Same household throughout: a $350,000 home versus $1,800/month rent for a comparable place, 10% down, 6.5% mortgage rate, and the down payment plus any monthly savings from renting invested at a moderate return instead.
5 years
Closing costs, moving costs, and the fact that early mortgage payments are mostly interest mean very little equity has built up by year 5. Combined with a real-estate agent commission on a hypothetical future sale, buying often comes out behind renting-and-investing at this horizon, even in a moderately appreciating market.
10 years
By year 10, meaningfully more of each payment goes to principal, and a decade of typical appreciation has had time to compound. This horizon is genuinely sensitive to local market assumptions — a stronger-than-average appreciation market tips clearly toward buying, while a flat or declining market can still favor renting.
20 years
At 20 years, the mortgage is largely paid down, accumulated equity is substantial, and the one-time upfront costs of buying have been amortized over a much longer period. Buying wins in the large majority of realistic 20-year scenarios, which is the main reason "buy if you're staying long-term" persists as common, generally sound advice.