A New Rent-Versus-Buy Calculator

It is the biggest financial decision for many younger adults: Should I rent a home or buy one? The decision is especially difficult these days, with both interest rates and rents having risen in the past few years.

To help people understand the trade-offs, The Times has just relaunched its popular rent-versus-buy calculator. Even if you already own your home — or are a committed renter — you may enjoy playing with the calculator and learning a few things about the real estate market. I did.

The calculator, which The Times’s Upshot section built, has been updated in several important ways, including to take into account the 2017 tax law that affected the mortgage-interest deduction.

Ultimately, the calculator can’t tell you whether you should rent or buy. That decision depends on the future paths of home prices and rents, which are unknowable. It also depends on your life stage — a factor that too many people fail to consider when making this decision. If you know you will move again a few years from now, for instance, buying is almost certainly a mistake.

Here are a few other points that the calculator helps highlight:

1. It’s OK to rent

I know that many people feel guilty about renting — as if it’s an inherently inferior decision that wastes money. That’s wrong (as I explained on a recent “Daily” episode). When house prices are high, as they are in most parts of the U.S., buying often wastes more money because of broker’s fees, mortgage interest, house repairs and other costs of owning.

“At this time, in the majority of circumstances, renting likely makes more economic sense than buying,” said Mark Zandi, the chief economist at Moody’s Analytics, who has advised our work on the calculator over the years. He notes that the typical monthly mortgage is about $2,000 today, more than double what it was when the pandemic hit in early 2020.