The math behind staying put: When does buying a home beat renting?

In January 2021, mortgage rates hit a record low of 2.65%. On October 29, 2026, Freddie Mac’s 30-year rate was 7.24%, more than a full point higher than a year ago. Including property taxes and insurance, the monthly cost of owning the typical home now runs about $930 more than the rent on an average apartment. A difference that size drives a lot of decisions in the apartment market, starting with whether renters keep renting or buy a home. So how far would rates have to fall for the two to even out? Farther than most people think.

To see how we got here, I went back to four moments when the math looked very different, from the high rates of 2000 to the record lows of 2021, and followed a household earning the median income through each one. At each moment, I compared the monthly loan payment on a typical home, using a 30-year fixed mortgage with 20% down, with the rent on an average apartment. On that basis alone, today’s payment of about $2,300 runs nearly $380 above the $1,915 average rent in our data. Taxes and insurance make up the rest, and I’ll get to those.

Through all four moments, renters have been responding to the math. In our data, they’re renewing more often than they did 20 years ago, and today they’re signing the longest renewal leases since our records began in 2002.

2000 and 2006: A much smaller gap

In the spring of 2000, the 30-year rate was about 8.3%, the kind of number that would stop most buyers today. But homes were cheaper relative to incomes. The median single-family home sold for about $144,000, according to the National Association of Realtors, or about 3.4 times the median household income. The monthly payment came to about $870, only about $40 more than the average rent in our data, and took about 25% of the Census Bureau’s median household income.

Six years later, near the peak of the housing boom, the math had shifted. Rates had eased, but the median price had climbed to $220,000. The payment now ran about $160 above average rent. The difference had grown, but for many households it was still manageable.

The down payment had grown, too, from more than two-thirds of a year’s median income in 2000 to more than 90% by 2006. Meanwhile, apartment occupancy slipped from 96% to just under 95%, after years of easy credit had pulled many renters into homeownership.

2012: Owning costs less than renting

After the housing crash, the picture flipped. By the end of 2012, the median home had fallen to about $181,000, and the 30-year rate had dropped to about 3.4%. The monthly payment was about $410 less than average rent and took only 15% of median income, the lowest share of the five moments.

On paper, owning was clearly the cheaper choice. In practice, it wasn’t that simple. Lenders had tightened their standards after the crisis, and saving a 20% down payment was still a big hurdle. Residents were already renewing more often, 49% at the end of 2012, up from 46% in 2006. For a lot of households, the math on paper and the reality didn’t line up.

2021: The cheapest money on record

Then came the pandemic, and with it record-low mortgage rates. Home prices were climbing fast, with the median at about $335,000 in early 2021, but with rates under 3%, the monthly payment was still more than $300 below average rent. At 19% of median income, the payment was easy to manage for a typical household.

It was a strong time for apartments, too. Job growth came back quickly, and apartment demand surged. By early 2022, occupancy in our data had climbed to 97.5%, the highest going back to 2000. Cheap mortgages and a strong rental market existed side by side, because the economy was creating new households fast enough to fill both.

That window didn’t stay open for long. As inflation picked up, the Fed began raising rates in 2022, and mortgage rates followed. By the end of that year, the 30-year rate was above 6%, and households that had waited to buy faced a very different payment on a similar home. Many decided to keep renting.

2026: The widest gap of the five

Today, rates and prices are both pushing the cost of owning higher. The median home sells for about $420,000, roughly 25% more than in early 2021, and the mortgage rate is more than twice as high. That puts the monthly loan payment at about $2,300, roughly 20% above average rent. Even in 2006, near the peak of the boom, the payment ran only about 16% above rent.

For a family earning the median household income, about $87,500 a year, that payment would take nearly a third of their income, up from 15% in 2012 and above the 30% line that lenders and housing economists often use as a sign of strain. The home itself costs about 4.8 times their annual income, the highest multiple of the five moments.

Add property taxes and insurance, and owning looks even more expensive. Using a national average effective property tax rate of 0.9%, according to ATTOM, and an average homeowners insurance premium of about $2,900 a year, according to Insurance.com, the full monthly cost of owning the median home comes to about $2,840. That’s about $930 above average rent, before a single repair bill.

Then there’s the down payment. Twenty percent down on today’s median home is about $84,000, nearly a full year of median household income and the highest share of the five moments. It’s no surprise that the typical first-time buyer is now 40 years old, according to the National Association of Realtors, and that first-time buyers made up just 21% of purchases, a record low.

Renters are staying put

Renters are doing the same math, and it shows. In Realpage data, 57% of renters whose leases were up in the third quarter of 2026 chose to renew, compared with 46% back in 2006. And when they renew, they’re signing on for longer. The average renewal lease now runs a little over 12 months, up from about 10 months in 2006 and the longest we’ve recorded since 2002.

Renters in every region are renewing more often than they did in 2006. The Northeast leads, with 64% of residents staying on in the third quarter. New leases are getting longer as well, averaging nearly 13 months nationally, which suggests renters are planning to stay put from the day they move in.

Owners and operators feel that in a couple of ways. When fewer residents move out to buy a home, occupancy holds up better, which helps in markets still working through a lot of new supply. Longer stays also mean fewer apartments to turn over, with fewer vacant days and lower make-ready costs.

How far the math would have to move

For renters weighing a move to ownership, there’s a lot of ground to make up. If home prices stay where they are, the 30-year rate would need to fall to about 5.5% for the monthly loan payment on a median home to match average rent. That’s below even this year’s low of just under 6%, reached in late February. Add in property taxes and insurance, and the break-even rate drops to about 2.7%, almost back to the record low of 2.65% from January 2021. Rates have been that low only during the pandemic lows of late 2020 and early 2021.

If rates stay where they are, the median price would need to fall to about $351,000, roughly 16% below today, for the loan payment to match rent. Rising incomes would narrow the gap too, but slowly. Median household income has grown about 3% a year on average since 2000, based on Census Bureau data. With prices and rates where they are, it would take about eight years of that growth for the monthly payment to fall back to 25% of income, where it was in 2000. Realistically, getting there would take some mix of all three.

Where you live changes the math, too. In the Midwest, where the median home sells for about $330,000, rates would only need to fall to about 6% for the loan payment to match average rent, so it wouldn’t take much of a drop to bring the two in line. In the West, with a median price of more than $610,000, the loan payment runs more than $1,000 above average rent, and rates would need to drop to about 4%. It’s also where apartment living is more common. Census Bureau data from 2018 show about 15% of residents in the West and Northeast lived in apartments, compared with under 10% in the Midwest.

Break-even rate for the monthly loan payment (principal and interest, 20% down) on a median-priced existing home, all housing types (Sept. 2026, not seasonally adjusted) to equal average apartment rent (Q3 2026). Sources: National Association of Realtors, Freddie Mac, Realpage.

What to watch from here

I’m watching three things. The first is the 10-year Treasury yield, which mortgage rates tend to follow more closely than the Fed’s own rate. The Fed held steady on October 28, 2026, and said inflation remains elevated. The 10-year has eased from above 5.3% in early October to about 5%, but mortgage rates are still above 7%. The second is home prices. Even modest declines, combined with rising incomes, would narrow the gap over time. The third is renters themselves. If renewals and lease lengths keep climbing, households are settling in for the long haul.

For the apartment industry, the first milestone I’ll be watching is 5.5%, the mortgage rate at which the loan payment alone on a median-priced home would match average apartment rent. It wouldn’t make owning cheaper, since taxes and insurance keep rising, but it would be the first sign that the math behind staying put is starting to shift.

Sources: Freddie Mac, Federal Reserve, National Association of Realtors via Moody’s Analytics, U.S. Census Bureau, ATTOM, Insurance.com, Realpage. Property tax: 2025 national average effective rate on single-family homes. Insurance: 2026 national average annual premium quote for $300,000 of dwelling coverage. Assumes 20% down; a smaller down payment would raise the cost of owning further. Taxes and insurance are national averages and vary by location; maintenance and tax deductions are not included.