Rent or Buy? How to Decide What Makes the Most Financial and Lifestyle Sense

Joe Frank
Jun 1
8 min read

Should you rent or buy a home in today’s housing market?

It’s one of the most important - and most personal - decision that you can make.

Rising home prices and elevated (and dynamic) mortgage rates, rent costs, and just the general uncertainty of the economy have complicated what was once a more straightforward equation.

This article breaks down the financial and lifestyle factors to consider, and provides examples, including how appreciation, investment returns, and tax savings can affect your decision.

We also look at U.S. cities where renting may make more financial sense than buying (and vice versa) in 2025.

Whether you’re in Snohomish County, western, central, or eastern Washington, or anywhere across the US, this guide can help you decide what may be right for you and your situation.

By The Numbers - The Quantitative Analysis: The Financial Side of Renting vs. Buying

Monthly Cost Comparison

To start, calculate and compare the total monthly cost of:

RENTING:
- Rent + renters insurance + utilities + maintenance (potential)
BUYING:
- Mortgage (Principal + Interest + Property Taxes + Home Owners Insurance) + HOA (if any) + Maintenance

The following is an example using the approximate home value and rental amount of a single family "starter" home in Snohomish County (as of May 2025).

RENTING (monthly cost):
- $3,200 + $20 renters insurance = $3,220 per month
BUYING (monthly cost - all numbers approximate):
- $700,000 home, 10% down, 6.5% interest
  - Mortgage = $4,000
  - Property taxes (1.2%) = $700
  - Insurance = $100
  - Maintenance/reserve = $300
  - Total = $5,100 per month

So in this example, there a $1,880 per month premium to own.

Note: this does not including potential tax benefits, home value appreciation, or equity gained from buying a home. We'll dig into this a bit later.

Upfront Costs

RENTING:
- Generally when renting a home, the upfront cost includes: first and last month rent, plus a refundable security deposit (of which a portion may be non-refundable for cleaning, etc). Often this amount can be calculated by taking the rent amount and multiplying by 3.
  - Total Upfront = $9,600.
- Most landlords will allow you to spread out the security deposit and/or last month rent over multiple months.
  - If your move-in costs (like the security deposit, nonrefundable fees, and/or last month’s rent) total more than 25% of the first month’s rent, Washington State law allows you to request a three-month installment plan to spread out those costs. You’ll need to ask your landlord in writing and sign a written agreement. (See RCW 59.18.610(2) for details.). The specifics can vary by State, County and City.
BUYING:
- 10% down on a $700,000 home = $70,000
- Closing Costs of 3% = $21,000
  - Averages 2 to 5% in WA state. This can includes loan/lender fees, title fees, appraisal, inspections, and more.
- Buyer Agent Commission of 2.5% = $17,500
- Total Upfront = $108,500
  - Note: To error on the conservative side, I'm including a real estate agent commission fee for the buy side calculation. In the Seattle area, this fee is still often covered by the seller, but that's not always the case, and may trend more toward the buyer side in time. The buyer agent fee is always negotiable. Read more about the Buyer agreement and fees here. “Most sellers are choosing to pay a 2.5% or 3% commission to the buyer’s agent, but I am seeing an increase in the number of sellers offering 2%,” said Stephanie Kastner, a Redfin Premier agent in Seattle. For further reading on buyer agent commissions, and recent trends (as of May 2025), check out this Redfin article.

Bottom Line: If you don’t have significant savings or prefer to invest your money elsewhere, renting may be the better choice in the short term.

Appreciation vs. Investment Returns

Home Appreciation (Historical Average) is about 3.5% annually in most U.S. markets. However, to achieve such a rate, plan to stay in a home for at least seven years.

Looking locally, many markets in Washington State saw home prices rise dramatically from about mid-2020 to mid-2022, but then declined and have since leveled off the last few years. This price action mirrors the higher mortgage interest rates which directly affects home affordability, and thus home prices.

To error on the side of caution due to the drastic home value appreciation in most housing markets from 2020 to 2022, lets use a more conservative (and realistic?) appreciation rate of 2% over the next seven years.

Investing Rental Savings:
- If you rent and invest the $1,880/month savings at a 5% annual return (safe index fund or retirement plan), your investment would grow to approximately $180,000 after 7 years.

Ownership Equity Gains:
- Over 7 years, a $700,000 home appreciating at 2% annually equates to approximately $104,000 in equity gain after 7 years (not including loan principal paid down).

That’s comparable to a conservative investment strategy - but the equity in a home is a real asset you can borrow against or sell.

Tax Savings from Owning

For your annual taxes, you can deduct your mortgage interest (on loans up to $750,000). The deductible amount will decrease over the life of your loan as you pay less and less interest. You can also deduct your property tax (up to $10,000 including state/local taxes, but may be changing).

Estimated Savings:

$700,000 loan at 6.5% = ~$44,000 in first-year interest
Property taxes = ~$6,000
If itemizing your taxes, your annual deduction may be worth $6,000–$8,000 in tax savings, depending on your income bracket.

Note: If you take the standard deduction (currently $13,850 single / $27,700 married), these benefits may be less impactful. Be sure to work with your accountant or tax professional to calculate your actual savings as it will vary depending upon your tax bracket, married status, and other factors.

Outside the Numbers - Qualitative Analysis: Lifestyle Factors That Influence the Decision

Flexibility vs. Stability

RENTING: Ideal for uncertainty - timelines (career, family, etc.) and economic times.
BUYING: Better for long-term stability and rootedness in a community

Control and Customization

OWNERS: Able to remodel, paint, landscape, or renovate at will (may need city, county, and/or HOA approval).
RENTERS: Normally limited to minor cosmetic changes which often must be coordinated and approved with landlord.

Routine Maintenance Responsibility

RENTERS: Many routine maintenance requirements such as gutter clean-out, garbage disposal repair / replacement, exterior pressure wash, house paint, etc are covered by the landlord. However basic upkeep such as mowing the lawn and general yard care is normally tenant responsibility.
OWNERS: Budget $3,000–$5,000 per year for upkeep and repairs.

Family and School Planning

If your primary goal is to create consistency, comfort, and opportunity for your children, buying a home in a strong school district may be worth the financial stretch.

Of course you may be able to find a rental home in a desirable area and/or school district, but you do not have assurance you'll be able to stay in the home long term due to rental rate increases or the home owner not renewing the lease because they want to sell the home, or event move into it.

While renting can offer short-term flexibility, homeownership offers a foundation - both literally and figuratively - for your family’s future.

Where It Makes More Sense to RENT in 2025

For some national perspective (and more extreme examples), in some cities, the price-to-rent ratio is so high that renting is significantly more affordable month-to-month than buying.

Cities where RENTING may be better than Buying (as of May 2025):

City	Average Monthly Rent	Median Home Price	Buy-to-Rent Monthly Cost Difference
San Jose, CA	$3,000	$1.3M	~ $4,900 more to buy per month
Seattle, WA	$2,700	$850,000	~ $2,400 more to buy per month
Los Angeles, CA	$2,800	$950,000	~ $2,900 more to buy per month
San Francisco, CA	$3,400	$1.4M	~ $5,000 more to buy per month
Boston, MA	$3,100	$800,000	~ $4,800 more to buy per month

In these areas, if you don't have a high down payment and not planning to stay at least 5–7 years, renting a home and investing your monthly savings may be the smarter choice.

** Please note the above numbers are averages and assume a 20% down payment, a fixed 30 year mortgage of 6.5%, and a property tax rate of 1.2%. The type and size of "average" house between a rental and a purchase may not be exact matches, thus potentially skewing the numbers. The analysis also excludes costs such as homeowner's insurance and HOA fees. Homeowners insurance has increased over the last several years, and can very dramatically based on a home's location. Florida (hurricane/flooding), California (wildfires), and Nebraska (tornadoes and hail) are examples of high insurance.

Where It Makes More Sense to BUY in 2025

In some cities, monthly mortgage payments are close to—or even lower than—rents. These are often fast-growing metros with rising appreciation potential.

Cities where BUYING may be better than Renting (as of May 2025):

City	Average Monthly Rent	Median Home Price	Buy-to-Rent Monthly Cost Difference
Cleveland, OH	$1,100	$175,000	~ $40 more to rent per month
Pittsburgh, PA	$1,200	$200,000	~ $10 more to buy per month
Tampa, FL	$1,900	$350,000	~ $20 more to buy per month
Oklahoma City, OK	$1,000	$200,000	~ $210 more to buy per month
Indianapolis, IN	$1,300	$275,000	~ $360 more to buy per month

It's important to note that these numbers do not consider the other benefits of buying a home such as: a fixed monthly payment, budling equity (paying down the mortgage loan over time), home value appreciation, and tax benefits. If those are factored in, it likely makes sense to buy in above scenarios if you plan to be there at least 5 years.

** Please note the above numbers are averages and assume a 20% down payment, a fixed 30 year mortgage of 6.5%, and a property tax rate of 1.2%. The type and size of "average" house between a rental and purchase may not be exact matches, thus potentially skewing the numbers. The analysis also excludes costs such as homeowner's insurance and HOA fees. Homeowners insurance has increased over the last several years, and can very dramatically based on a home's location. Florida (hurricane/flooding), California (wildfires), and Nebraska (tornadoes and hail) are examples of high insurance.

How to Decide What’s Right for YOU? Ask yourself these questions:

How long will I live in this area?
- Less than 5 years? Renting may make more sense.
- 7+ years? Buying could make more financial sense.
Do I have enough saved for a down payment, closing costs, possible real estate commissions, home maintenance, and emergency funds?
Can I afford the monthly costs without becoming house poor (and not being able to continue a lifestyle you enjoy - traveling, entertainment, vehicles, hobbies, etc)?
Do I want flexibility or long-term roots?
Am I comfortable with the responsibilities of owning a home?

Let’s Do the Math Together

As a real estate professional, I can help you:

Crete and review a custom rent vs. buy analysis that considers your specific situation.
Estimate monthly and upfront costs.
Review tax implications.
Connect you with a trusted mortgage advisor and/or financial planner.

Whether you’re considering a home in Snohomish or Skagit County, or surrounding areas, I’m here to help you make a confident and informed decision.

If you're thinking of moving out of the Puget Sound region or Washington State all together, I have real estate connections throughout the US, and can provide you with names of some great agents that will be very familiar with the area(s) your looking into.

Get in Touch today for a free, personalized consultation or to discuss this article in more depth.

As always, thank you for taking the time to read this article!

Cheers!

-Joe