Most rent vs buy calculators compare your monthly mortgage payment to your rent. That misses the full picture. This one doesn't.
When you buy a home, you tie up your down payment — often $100K+. That money could instead be invested in a diversified portfolio averaging ~7% annually. This calculator tracks exactly what that down payment would have grown to if you'd invested it instead, and adds it to the true cost of buying.
The break-even year is when cumulative net buying costs dip below cumulative net renting costs — i.e., when all the equity, appreciation, and tax benefits of owning finally outweigh all the costs and foregone investment returns. Before that year, renting is financially superior. After it, buying is.
Divide median home price by annual rent. Below 15 historically favors buying; above 20 suggests renting; above 25 strongly favors renting. San Francisco and San Jose routinely exceed 30, meaning the same monthly payment rents a nicer home than it could buy.
Home prices and rents are sourced from the Zillow Home Value Index (ZHVI) and Zillow Observed Rent Index (ZORI). All figures are metro-area medians and are updated periodically. They represent a starting point — adjust the inputs to match the specific property you're considering.
These omissions generally make buying look slightly more favorable than it is. Factor them in for a full picture.