Key Takeaways
- If your rent increases, you may think buying is the way to save, but interest rates and housing costs are critical factors.
- Staying in one place for at least five to seven years often makes homeownership more advantageous.
- If both renting and buying feel unaffordable, strategies like shared housing, relocating, or negotiating your salary can help.
With average rent prices climbing nearly 28% over the past five years, many renters across the country are wondering if homeownership might be the smarter financial move.
The answer isn’t exactly straightforward, according to Kirk Reagan, owner of High Flight Financial.
“There are too many factors for a golden rule,” he said.
To help clients sort through the numbers, Reagan determines the breakeven point in the buy vs. rent debate. Ultimately, prices and interest rates are the biggest factors, but Reagan also takes into account your down payment, property taxes, insurance, and other costs like maintenance. Of course, you should also consider how long you plan to stay put and other lifestyle choices.
Renting vs. Buying: Here’s What the Numbers Say
One quick rule of thumb is the price-to-rent ratio, according to Sarah Maitre, founder of Camriel Advisors. This ratio is the purchase price of a home divided by the annual rent you are paying.
“If a home costs less than about 20 times the annual rent, buying can start to make sense,” she said.
By that math, if you’re paying $2,000 a month in rent—or $24,000 a year—buying a comparable home priced over $480,000 may not be a smart move. Maitre cautions, however, that homeownership carries many extra costs—and interest rates, in particular, can make a big difference.
Reagan’s calculator helps illustrate how those costs affect the outcome. When you factor in a 6.00% mortgage rate, property taxes, insurance, and maintenance, it makes more sense to rent at $2,000 per month ($24,000 annually) unless you can find a comparable home priced closer to $335,000—a price-to-rent ratio of about 14. These differences show why it’s important to treat rules of thumb as starting points, and not final answers.
The Average Price-to-Rent Ratio
The median price-to-rent ratio in the U.S. was about 14.3 in 2024, according to an analysis by real estate firm Clever.
Another very important factor is how long you plan to stay in your home. Generally, the longer you plan to remain in your home, the more it makes sense to buy. In his calculator, Reagan emphasizes the “breakeven point,” or how long it takes before the benefits of homeownership outweigh the savings from renting.
On a $325,000 home with a 6.50% loan, the breakeven point is about 14 years, assuming a 20% down payment and a comparable rental home priced at $2,000 monthly. Again, these numbers are very sensitive to changing costs. For example, if all else is equal but rates drop to 4.00%, the breakeven point would shrink to just over three years.
Average Rent vs. Median Home Price
Average rent across all home types in the U.S. was $2,000 per month as of November 2025, while the median home price in October 2025 was $440,387.
If these are your options, Reagan’s calculator says you’re likely better off renting. This assumes a 6.00% interest rate, a 30-year fixed mortgage, and a 7% rate of return on the 20% down payment and additional monthly costs you are saving, among other factors. Even though renters are not building equity in a home, they are able to build savings by investing their down payment and the difference between their monthly rent and their mortgage payment.
After five years, renters would have the 20% down payment plus $112 per month saved, totally up to $94,798. If renters invested the down payment, and then the additional monthly amount of $112 per month in an index fund that returned a 7% annual rate of return, they’d have over $132,000 after five years. After 10 years of that investment strategy, they’d have over $193,000.
Renting vs. Buying
Comparison
Rent
Buy
Down Payment
$0
$88,078
Monthly Costs
$2,000
$2,112
Costs After 5 Years
$120,000
$214,798
Property taxes, home insurance, renter’s insurance, HOA fees, and closing costs are not factored into the monthly costs.
Beyond the Math: Lifestyle and Stability
For many, the real question is less about spreadsheets and more about life plans.
“The biggest factor is how sure you are that you will stay in the home,” Reagan said.
If you expect to move in a few years, renting may still be the best choice. Owning also requires upkeep.
“Would you add value or take it away? Are you okay with doing all the maintenance yourself or paying for it?” he said.
Maitre echoes the point. Renting offers flexibility if you want to move for a job or adventure, while buying is best if you want the stability of putting down roots and customizing your forever home. She also emphasizes the need for savings.
“Homeownership means you’re the one paying to repair the heat pump that breaks during a huge snowstorm,” she said.
Sam Mockford, an advisor at Citrine Capital, lists additional readiness factors: having enough saved for a down payment plus closing costs, ensuring monthly mortgage payments fit the budget, and a willingness to stay put for five to 10 years. She added that lifestyle fit matters too—like the commute, social life, and local culture.
Options When Both Renting and Buying Feel Out of Reach
For those who feel priced out of both options, there are still ways to ease the strain.
Sharing a two-bedroom apartment with a roommate is a lot cheaper than renting a one-bedroom by yourself.
“Instead, find a friend and invest the savings,” Reagan said.
According to the U.S. Census Bureau, the median rent for a one-bedroom in the U.S. is $1,301, compared to $1,490 for a two-bedroom. That means two friends splitting a two-bedroom could be paying about $745 per month apiece—nearly 43% less than what they’d each be spending on a one-bedroom. Over a year, that can translate to nearly $7,000 in savings.
If you’re not quite willing to have a roommate, Maitre recommends expanding the search area.
“Your money can go much further by looking just outside of major cities where commutes are reasonable but housing is less expensive,” she said.
- Mockford offers a broad set of strategies:
- Consider remote work to relocate to a cheaper area
- Negotiate higher pay using cost-of-living data
- Supplement income through side hustles like Uber or DoorDash
- Cutting expenses or even subletting a room can provide breathing room while saving for long-term goals
The Bottom Line
When the price of rent increases, it can make buying look more attractive, but the decision depends on more than monthly costs. Interest rates, time horizon, and lifestyle priorities all shape whether ownership makes sense. A fixed mortgage can sometimes beat escalating rent—but only if the numbers and the life stage line up. For those caught in the middle, creative strategies to lower housing costs and boost savings can keep long-term stability in reach.
