Rent vs Buy if You're Staying 7 Years

If you're planning to stay 7 years, the rent vs buy decision increasingly favors buying in most US markets. At 7 years, most buyers have passed the break-even in typical markets. Equity accumulation and appreciation start to dominate. Using a $500,000 home as our baseline (with 20% down, 6.75% rate), the monthly mortgage is $2,594 vs $2,200/month to rent — a $852/month cost premium for buying before factoring in equity gains.

Over 7 years, a renter pays ~$205K in total rent (growing ~3%/year) and builds $0 in housing equity. A buyer over the same period accumulates roughly $296K in total home equity — the $100K down payment, plus ~$136K in appreciation (3.5%/year), plus ~$60K in mortgage principal paydown. That's a $228K swing in favor of buying in pure equity terms.

But the comparison isn't just about housing equity. The renter who invests the $852/month cost difference plus puts the $100K down payment in stocks (7%/year) accumulates significant investment wealth too. Over 7 years, the invested down payment alone grows to $161K. This is why buying typically wins over longer horizons once appreciation compounds enough.

The 15,000 in closing costs (3%) and future selling costs (~6%) create a hurdle that takes time to overcome. Over 7 years, home appreciation (~$136K at 3.5%/year) more than covers transaction costs, tilting the math toward buying. Use the calculator below to model your exact situation.