The rent vs buy decision is ultimately a financial calculation, not an emotional one. The right answer depends on your local market's price-to-rent ratio, your expected tenure, and the opportunity cost of your down payment.
Price-to-Rent Ratio
Price-to-Rent Ratio = Median Home Price / Annual Rent
< 15 → Buy is generally favoured
15–20 → Neutral; depends on tenure and rate assumptions
> 20 → Renting is often more cost-efficient
2025 Price-to-Rent by Metro
| Metro | Median Price | Annual Rent (2BR) | P/R Ratio | Verdict |
|---|---|---|---|---|
| Memphis, TN | $195,000 | $14,700 | 13.3 | Buy favoured |
| Indianapolis, IN | $250,000 | $16,320 | 15.3 | Neutral |
| Austin, TX | $475,000 | $22,200 | 21.4 | Rent favoured |
| Seattle, WA | $745,000 | $28,800 | 25.9 | Rent favoured |
| Miami, FL | $595,000 | $28,200 | 21.1 | Rent favoured |
Break-Even Horizon
Even in rent-favoured markets, buying eventually wins if you stay long enough. The break-even horizon is the number of years after which buying becomes cheaper than renting, accounting for appreciation, equity buildup, and opportunity cost. In most US markets at 2025 prices and rates, the break-even is 5–9 years.
If you expect to move within 5 years, renting is almost always more cost-efficient due to transaction costs (6% commission, closing costs).