*Simple estimation excluding property tax, equity gains, and maintenance.
One of the most persistent myths in finance is that renting is a waste of money while buying is an "investment." In reality, buying a home comes with significant unrecoverable costs: mortgage interest, property taxes, maintenance (usually 1% of home value/year), and closing costs. Renting is simply paying for a service (housing) without the liability of ownership.
A quick way to compare is the "5% Rule." Take the home price and multiply it by 5%. divide that by 12. If your monthly rent is lower than that number, renting is likely the better financial decision. This accounts for the cost of capital (opportunity cost), taxes, and maintenance that homeowners pay but renters don't.
Financials aside, the decision is lifestyle-based. Renting offers flexibility—if you get a new job in another city, you can leave in 30 days. Owning offers stability—your landlord can never evict you or raise the rent, but selling the home costs 6% in realtor fees and takes months.