Welcome back to Home Economics, a data-driven newsletter about the American housing market.
I’m on paternity leave—but it turns out that babies sleep a lot. I’m seizing these scattered windows of opportunity to finalize an analysis I began over the summer: calculating exactly how much I saved by owning my home (2017–2024) instead of renting.

If You Want Something Done Right…

Few personal financial decisions are more important—and more complex—than whether to buy or rent a home. The answer depends on countless factors, and reasoning alone won’t get you there. You need to model it.

When I was considering buying a home in 2017, I scoured the internet for a good, user-friendly ‘buy vs. rent’ model. I was disappointed. Even the best tools—like the New York Times calculator—rely on sweeping simplifications. They often overlook critical factors such as mortgage structure or refinancing options, which can produce misleading results.

So I built my own model (an Excel spreadsheet) and shared it with subscribers last year. An updated version—featuring the ability to model interest-only mortgages—is now available. It’s here for paying subscribers:

Buy or Rent Model 3.0 Aziz Sunderji · 12:44 AM Read full story

It was this model that gave me the confidence to take the leap and buy a home seven years ago. And now, in retrospect, I can use the same model to evaluate whether that decision paid off.

I Saved $165,000 by Buying Instead of Renting

Calculating the past economics of buying versus renting is easier than projecting forward because all the inputs—the sale price, stock market performance, rent increases, etc.—are known. For me, buying turned out to be a very good decision.

The chart above shows the total costs (including opportunity costs, such as not investing the down payment in the stock market) of buying versus renting, broken down by holding period.

• If I had sold after just two years, ownership would have cost me $162,000. That’s steep for just 24 months of housing! There wouldn’t have been much time for the home to appreciate in value, and transaction costs would have been spread over only two years. Renting—at a total cost of $110,000—would have been the better option.

• By year 4, the two strategies were roughly equal.

• By year 7, when I sold, my total cost of ownership was $165,000 lower than what I would have spent renting.

Why Was Owning Better?

If you know the Brooklyn property market well, this might surprise you. Home prices didn’t rise much during this period. In fact, I sold my home for only about $150,000 more than I paid for it—peanuts for a $1.2 million property over seven years. So why did I still come out ahead buying rather than renting?

1. Low Recurring Costs:
   I bought into a self-managed co-op building with very low monthly fees. Combined with low insurance costs, my total recurring expenses were just a few hundred dollars a month.

2. Minimal Improvements:
   I invested very little in the property. I resurfaced the floors ($8,000) and installed mini-split air conditioning ($10,000), but I deliberately bought a home that didn’t need major work.

3. Smart Financing:
   The most significant factor was my financing strategy. I used an adjustable-rate, interest-only mortgage at a remarkably low 2.98%. This was possible due to a combination of factors: a strong credit score, economic conditions at the time, and the typically lower rates of adjustable-rate mortgages compared to fixed-rate loans.

   Had I chosen a conventional 30-year fixed-rate mortgage, the picture would have been very different. Instead of saving $165,000, I would have spent an additional $133,000 by year 7. My financing choice alone saved me approximately $300,000.

Stress-Testing the Transaction

The chart below shows how I would have fared under different scenarios. What if interest rates had been higher? What if home prices had declined instead of rising (even modestly)?

Each cell represents the money saved (or lost) by buying instead of renting. My actual transaction is in the first row, where I broke even by year 4 (indicated by the hashed box).

Below that, I tested stress scenarios by adjusting key variables—home prices, interest rates, and mortgage type—up and down by one standard deviation (based on the last 20 years of data).

Here’s what I found:

1. Home Price Movements Matter Most:
   If home prices had fallen by one standard deviation during my holding period, it would have taken 11 years for buying to beat renting. But I’d still come out on top buying, because my monthly mortgage was so much lower than equivalent rents.

2. Interest Rates Had Limited Impact:
   Because I used an interest-only mortgage, the interest rate had minimal effect on my overall costs.

3. Conventional Mortgages Change the Equation:
   Had I used a typical 30-year fixed mortgage at a then-normal 4% interest rate, buying would never have been more economical than renting. The higher interest costs, combined with opportunity costs (missed stock market gains) and the slow appreciation of home prices, would have led to increasingly worse economics for buying over time.

Of course, this assumes the stock market would have continued to outperform housing indefinitely—a strong assumption. Subscribers can explore alternative scenarios using the downloadable model (again, here):

Buy or Rent Model 3.0 Aziz Sunderji · 12:44 AM Read full story

Final Thoughts

The decision to buy versus rent is nuanced and highly dependent on individual circumstances, market conditions, and financing strategies. While my experience turned out favorably, it was far from guaranteed. The key lesson: the devil is in the details.

If you—or someone you’re advising—is facing this decision, I recommend building or buying a rigorous model to guide you.