The New York Times has one of the slickest looking buy or rent calculators ^{[3]} (one of the hottest Devil’s Advocate subjects on Bargaineering is rent vs. buy ^{[4]}) I’ve seen in quite some time. It can be as complicated (using advanced settings) or as simple (fill out five fields – monthly rent, home price, down payment, mortgage rate, and property taxes) as you want and it gives you an answer in an easy to see graph.

I decided it would be fun to put in our information from when we bought our home six years ago. We paid $295,000, put 20% down, and faced monthly rent somewhere in the neighborhood of $1,500 for a 2-bedroom apartment. We know our mortgage interest rate was 5.25% and property taxes at around 1% (due to a homestead tax cap, our actual rate is 3% but the effective rate is only around 1%).

For the most part, we assume rent increases with historical inflation (~4%) and if we have a home price change of 0% (which is close to reality, our home is worth no more and really no less than it did six years ago), the calculator says we would break even at 12 years. We’re halfway there. A change of just 1% in appreciation, which is lower than the historical appreciation of homes (but more than the actual appreciation over the last six years) reduces that breakeven point by 3 years. 2% appreciation (annually each year) means we would’ve broken even in six years.

Back when I did the rent vs. buy analysis, I assumed home prices would increase with inflation. 4% appreciation with 4% inflation meant I’d break even after 3 years, a near no-brainer given my situation. Even at 3% appreciation, 3% inflation, breakeven was after 5 years.

The fun part about the calculator is the graph. It responds instantly to all the fields and tickers you play with. The wealth of information at the bottom (which you reveal when you click on a year in the graph) is also pretty handy too, especially if you like to play with numbers.