While the rent vs. own debate rages on, you should know how these calculations work so that you can make the best choice for yourself when it comes to deciding which road to take. Zillow staffer Julian Hebron explains that the first way to compare which is better is to calculate the monthly cost of home ownership, subtract tax benefits, and then compare that number to the monthly cost of renting.
The next way is to find the breakeven horizon:
Breakeven horizon is the year when buying costs become less than or equal to renting costs, when accounting of all of the factors noted above.
According to the most recent quarterly data, the breakeven horizon is less than two years in 72 of America’s 100 largest markets. When it comes to making an investment as large and as long-term as a home purchase, this is a very compelling breakeven period.