With a 4.8% mortgage rate, 20% down, 37% marginal tax rates, 3% inflation, closing/buying costs around 3%, 9% rate of return on capital and ~$700/month:
Buying a $600k place is break-even with renting at $2500/month after 4 years and buying is better thereafter. $800k is break-even at around $3300/month
There is government distortion playing in. The mortgage tax deduction (esp. in a state with high income tax rates) provides huge incentives to buy. $4,000 a month in rent is only equal to $800k buying if you are below the 15% income tax bracket.
I ran this awhile back with the nytimes buy-rent calculator: http://www.nytimes.com/interactive/business/buy-rent-calcula...
With a 4.8% mortgage rate, 20% down, 37% marginal tax rates, 3% inflation, closing/buying costs around 3%, 9% rate of return on capital and ~$700/month:
Buying a $600k place is break-even with renting at $2500/month after 4 years and buying is better thereafter. $800k is break-even at around $3300/month
There is government distortion playing in. The mortgage tax deduction (esp. in a state with high income tax rates) provides huge incentives to buy. $4,000 a month in rent is only equal to $800k buying if you are below the 15% income tax bracket.