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Methodology

How the calculator turns your inputs into a verdict, where every number comes from, and what it deliberately leaves out.

The comparison

Two households start with the same money. The renter invests the down payment and buying costs in stocks at the start. Each month, whichever household's housing cost is lower invests the difference in stocks, so neither side gets a hidden advantage from spending less. At the end, the buyer sells: their net worth is the sale price minus selling costs, any remaining mortgage balance and tax, plus their own portfolio. The renter's net worth is their portfolio, after tax if you choose to sell everything. All amounts are in nominal dollars, meaning the dollars of the year you sell.

The headline percentage is the share of scenarios in which renting (or buying) ended with the higher net worth. Break-even rent and price are the values at which the two sides win equally often.

Historical mode

Historical mode uses every overlapping monthly window from Jan 1975 to May 2026. Stocks, home prices and inflation come from the same months, so 1979 inflation lines up with 1979 stocks and home prices.

Stock returns are U.S. large-company total returns from Robert Shiller's data, which is based on the S&P 500 (dividends from Jul 2026 on estimated at a 1.17% yield). The calculator stores monthly returns, not index values. Home prices use the FHFA all-transactions House Price Index for the United States; choosing a state swaps in the same index for that state. Both are quarterly from 1975 (from FHFA's HPI master file) and are smoothed to monthly steps by log-linear interpolation, with each quarter centred on its middle month. The all-transactions index includes appraisals from refinancings, and a statewide average can differ a lot from a single town.

Overlapping windows are not independent, so treat percentages as descriptive, not probabilities. Each window carries its own inflation, so a 1980 purchase and a 2010 purchase are not in the same dollars.

Simulated and fixed returns

Simulated stocks and home prices draw monthly lognormal returns whose expected annual return equals your input, with the volatility you set. When both are simulated you can set their correlation (history since 1975 suggests close to zero). Real home prices move slowly and trend for years, which independent monthly draws understate, so a home volatility of 5–8% is a reasonable range. When the other series is historical, each window gets its own simulated path.

Fixed returns have zero volatility. With no volatility on either side there is a single outcome, so the calculator shows the dollar gap and net worth over time instead of a win rate.

Your mortgage rate stays fixed across all windows; historical rates are not replayed. Default mortgage rates are the Freddie Mac survey for Oct 1, 2026: 7.28% (30-year) and 6.60% (15-year).

Property tax by ZIP

The ZIP code rate is an effective rate: median real estate taxes paid (table B25103) divided by median owner-occupied home value (B25077), from the Census Bureau's American Community Survey 5-year estimates for the ZIP Code Tabulation Area. When the ZIP has no estimate, the calculator uses the county that covers most of the ZIP's land area (2020 ZCTA–county relationship file), and failing that the state.

The Census caps reported tax bills at $10,000, so rates in high-tax areas can be understated. ZCTAs approximate ZIP codes, and PO-box-only ZIPs have no data. Your actual bill depends on your assessment and local rules.

Assessment caps

Several states limit how fast a home's taxable value can rise each year, whatever the market does. With the cap on, tax is charged on a value that starts at your purchase price and rises each year by the lesser of the cap (and, in California, Florida and Michigan, that year's inflation) and the home's actual growth. If prices fall, the taxable value falls with them. Entering a ZIP code in a cap state turns the cap on with that state's rule.

Most of these caps restart at the purchase price when a home sells, so the ZIP average, which includes long-time owners paying tax on old, low values, tends to understate a new buyer's rate. In California the calculator uses at least 1.1% for that reason. Local rules vary (Maryland counties often cap lower; Arizona and Oregon caps carry over to the new owner), so check with your county if the tax bill matters to your decision.

Owning costs and rent

Property tax, insurance and maintenance scale with the home's value; HOA dues grow with inflation. Rent either rises with inflation (in historical runs, each period's actual inflation, so rent keeps pace in decades like the 1970s; otherwise your inflation assumption) or by a fixed rate you choose, the same every year in every scenario.

PMI applies below 20% down until the balance falls to 78% of the purchase price. The interest-only loan pays interest only for the interest-only period, then amortizes over the rest of 30 years. Any balance left at the end is paid off from the sale.

Taxes

Taxes follow current federal law in simplified form. Owning counts only for the itemized deductions it adds above what you would deduct anyway (the standard deduction, or your other itemized deductions), valued at your marginal rate. That includes mortgage interest on up to $750,000 of debt, property tax within the SALT cap, and PMI.

The SALT cap is $40,400 in 2026, rises 1% a year and drops to $10,000 from 2030 unless you turn that off. For household income over $505,000 it shrinks by 30% of the excess, down to $10,000. The PMI deduction phases out between $100,000 and $110,000 of income.

At sale, the $250,000 / $500,000 home-sale exclusion applies only if you owned for at least 2 years, and gains on anything held a year or less are taxed at your marginal rate. Portfolio gains are taxed at your capital gains rate at the end if you choose to sell everything. Income, state tax and the standard deduction are assumed to grow with inflation.

Data sources

Market data is refreshed automatically every week. Each new download is checked against the previous data before it goes live, and a source that fails the checks keeps its previous values. Market data was last updated Oct 2, 2026. ZIP-code property tax rates come out once a year and are updated by hand.

Known simplifications

If you think something is wrong or missing, please let us know.

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