True Cost
Powered by Zillow ZHVI · FRED · Shiller S&P 500

Was Buying Better Than Renting?

Historical analysis by ZIP code — actual home prices, real mortgage rates, and S&P 500 returns from 2000 to 2024.

Buy vs Rent — Research & Methodology

How We Calculate Historical Buy vs Rent Returns

For each starting quarter, we simulate two people with identical initial cash who take different paths:

🏠 The Buyer

Puts 20% down + 4% closing costs. Takes a 30-year fixed mortgage at the actual FRED rate. Pays property taxes, insurance (0.35%/yr), and maintenance (1%/yr). Sells at the end with 6% selling costs.

📈 The Renter

Invests the same initial cash (down + closing) in the S&P 500. Each quarter, invests the difference between what the buyer pays and what rent costs. Dividends taxed at 15%. Portfolio grows with real total returns.

We compare final wealth after the holding period. Data sources: Zillow ZHVI for home values (2000–2024, ~26,000 ZIP codes), Zillow ZORI for rents (2015–2024), HUD Fair Market Rents for pre-2015 estimates, FRED MORTGAGE30US for mortgage rates, and Shiller data for S&P 500 total returns.

Why Timing Matters in Real Estate

Unlike the stock market, you can't dollar-cost-average into a home — you buy once, at a single price, and that entry price determines your entire trajectory. This creates what researchers call sequence-of-returns risk in reverse: bad timing can cost you decades of wealth.

Consider two buyers in the same ZIP code: one who bought in 2006 at peak prices, and one who bought in 2012 after the crash. After 10 years, the 2012 buyer likely has hundreds of thousands more in wealth — not because they were smarter, but because they got luckier on timing.

The heatmap chart makes this visible at a glance. Dark green cells — often around 2011–2013 — show where buyers crushed renters. Rows near 2005–2006 often show red across multiple holding periods, especially for 5 and 10-year holds. The longer you hold, the more timing gets diluted by appreciation.

Historical Buy vs Rent — FAQ

Has buying a home historically been better than renting?

It depends on when and where you bought. Nationally, buying has outperformed renting in roughly 60–70% of 10-year periods since 2000 — but the variation by ZIP code and timing is enormous. Buyers who entered before the 2006 peak struggled, while those who bought in 2010–2014 often saw massive outperformance. This tool shows you the actual outcomes by ZIP code.

How is the buy vs rent comparison calculated?

We simulate two scenarios starting in the same quarter with the same initial cash. The buyer puts 20% down plus 4% closing costs, takes a 30-year mortgage at the actual FRED rate for that quarter, and pays taxes, insurance, and maintenance throughout the period. At sale, they pay 6% selling costs. The renter invests that same initial cash in the S&P 500 and invests (or disinvests) the difference between buying and renting costs each quarter. Both scenarios are compared at the end of the holding period.

What data sources are used?

Home values come from Zillow ZHVI (Zillow Home Value Index), middle tier, from 2000 to 2024. Rent data comes from Zillow ZORI (Zillow Observed Rent Index) from 2015 onward; pre-2015 rents are estimated from HUD Fair Market Rents scaled to each ZIP code. Mortgage rates are from the FRED MORTGAGE30US weekly series. S&P 500 returns (including dividends, after 15% dividend tax) are from Professor Robert Shiller's data.

Does the analysis include property taxes?

Yes. Property taxes are included in the buyer's annual costs, auto-filled from county records for each ZIP. You can override the rate in the "Adjust Assumptions" section. The default rate is the effective property tax rate (actual taxes paid as % of home value), which accounts for homestead exemptions and assessment caps that often make the real rate lower than the statutory rate.

What is the "All Homes" vs "Single Family" home type?

"All Homes" uses Zillow's broadest index combining single-family homes and condos, with rents from Zillow's combined SFR/condo/multifamily rent index. "Single Family (SFR)" uses Zillow's SFR-only home value index with SFR-specific rents derived from metro-level SFR rent premiums. For most users, "All Homes" provides more data coverage and is the better default.

Why does the holding period matter so much?

Transaction costs (down payment deployment, 4% closing costs on entry, 6% selling costs on exit) mean buyers need time for home appreciation to overcome the friction. Over 5-year periods, renting often wins unless appreciation was exceptional. Over 20-year periods, buyers almost always win due to compounding appreciation and forced equity savings. The 10-year analysis is often considered the most representative for typical homeowners.

Historical Buy vs Rent Analysis by ZIP Code | True Cost | True Cost