Buy vs Rent Decision
Most mortgage marketing pushes you to buy. This page runs the math both directions and tells you when renting genuinely wins. That happens more often than lenders admit.
Buy if you can answer YES to ALL of these: stay 5+ years, save at least 10% down, HOA under $500/mo, 3-6 months emergency fund BEYOND the down payment, and stable income. Fewer than four YES answers means renting your apartment is very likely the smarter financial play in 2026.
Price-to-rent ratio = purchase price divided by annual rent for a comparable unit. Under 15: buying looks good. 15-20: grey zone. Over 20: renting likely wins on cash-flow math. Data: Zillow Research, Apartment List, CoStar Q1 2026.
| Metro | Price-to-Rent Ratio | Verdict |
|---|---|---|
| San Francisco | 42 | Renting wins |
| Los Angeles | 38 | Renting wins |
| New York City | 35 | Renting wins |
| Seattle | 32 | Renting wins |
| Boston | 29 | Grey zone |
| Washington DC | 26 | Grey zone |
| Denver | 22 | Grey zone |
| Miami | 22 | Grey zone |
| Atlanta | 17 | Buying looks good |
| Chicago | 16 | Buying looks good |
On a $350,000 condo with 10% down (6.8% mortgage rate, $400/mo HOA, $3,850/year property tax, $600/year HO-6 insurance):
This is the section most mortgage calculators omit: what would your $35,000 down payment earn if you invested it instead of locking it into a property?
At a 7% real annual return (S&P 500 index historical average, inflation-adjusted), $35,000 grows to approximately $68,900 in 10 years and $133,000 in 20 years. That is the opportunity cost of ownership. If your condo appreciates at 2.5% annually, the $350K unit is worth about $448K in 10 years -- a gross gain of $98K. After subtracting closing costs on the sale ($25K at 5.5%), the net gain is $73K. Against a $69K counterfactual from investing the down payment, the condo wins by about $4K over 10 years -- before accounting for the extra carrying costs above rent.
In most high-PTR metros, rent-and-invest beats buy-and-hold over 10-year periods. In low-PTR metros with strong appreciation, buying wins. The calculator on the true cost page lets you model your specific numbers.
If you have already decided to buy and want the full buyer-side analysis -- FHA approval, non-warrantable condos, HOA governance vetting -- our sister site condovsapartment.com covers the purchase process in depth.
The typical break-even is 5-8 years in most US markets, assuming 3% annual appreciation and 3% annual rent growth. In high-cost markets (San Francisco, NYC, LA), it can be 10-15 years. In mid-tier markets (Atlanta, Chicago, Indianapolis), it can be as short as 4-5 years. The key drivers are closing costs (3-5% of price, paid upfront) and HOA fees -- both slow down the buy-side break-even considerably.
If you have $35,000 saved as a 10% down payment on a $350,000 condo, consider what that money would earn if invested in a diversified index fund instead. At the S&P 500 historical average of approximately 7% real annual return, $35,000 grows to roughly $69,000 in 10 years and $133,000 in 20 years. If your condo appreciates at 2.5% annually, that same $350,000 unit is worth about $448,000 in 10 years -- a $98,000 gain on a 10% down payment, before subtracting HOA, taxes, and maintenance. The comparison is closer than it looks.
The price-to-rent ratio is the purchase price divided by annual rent for a comparable unit. A ratio under 15 suggests buying is financially advantageous. 15-20 is a grey zone where personal circumstances dominate. Over 20 means renting is likely cheaper on a pure cash-flow basis. Example: a $480,000 condo in a market where equivalent apartments rent for $2,200 per month has a PTR of 480,000 divided by 26,400 equals 18.2 -- grey zone, leaning rent.
Six things consistently surprise first-time condo buyers: HOA fee growth (3-8% annually in most buildings, compounding over time), reserve fund shortfalls in older buildings (meaning a special assessment is coming), the FHA MIP trap (mortgage insurance that never drops on loans with less than 10% down), HO-6 condo insurance cost (often forgotten until closing), special assessment risk from deferred building maintenance, and the liquidity cost of ownership (selling a condo takes weeks to months and costs 5-8% of price in agent fees and closing costs).
Sources: Zillow Research price-to-rent ratios Q1 2026; Apartment List rent growth data; S&P 500 historical real returns (Aswath Damodaran NYU database); CAI HOA fee growth data; CoreLogic ClosingCorp 2026. Last verified April 2026.