Renting against buying, and how to tell

Most people meet this question as a slogan, and the slogans come from both directions. Renting is throwing money away. You're paying your landlord's mortgage. Get on the ladder before it's too late. Or, from the other side: a house is a liability, not an asset, and you should wait for the crash.

There's a real question underneath, and it has an answer, but the answer is different for different people in a way that slogans can't carry. So this lesson doesn't tell you whether to buy. It hands you the arithmetic that decides it, and then it shows you which number in that arithmetic matters most, which turns out to be the one nobody can know in advance.

Where this applies. The machinery here is US: thirty-year fixed mortgages, private mortgage insurance, local property taxes, and agents paid by percentage commission. The thirty-year fixed barely exists outside the United States, and in much of the world a mortgage rate resets every few years, which changes the risk of owning considerably. What transfers everywhere is the method: total everything owning costs you that you never get back, compare it against rent for the same place, and find how long you'd have to stay for the transaction costs to be worth paying. This is education, not personalised advice, and this is the lesson in the course where that matters most, because a house is the largest transaction most people ever make.

The comparison almost everyone makes, and why it isn't the right one

Priya, from lesson 8, is looking at a house at $400,000 and a rental down the street at $2,200 a month. She's got $88,000 saved, enough for 20% down and closing costs.

She does the sum everybody does. With 20% down, a $320,000 mortgage at 6% over thirty years is $1,919 a month (to be exact, $1,918.56, which is where the odd-looking annual totals below come from). Rent is $2,200. The mortgage is $281 a month cheaper, and at the end of thirty years she owns a house instead of a pile of receipts. It looks decided.

It isn't, because $1,919 is not what owning costs. It's what the bank charges. The costs of owning that don't appear anywhere on that statement are larger than the statement.

The sum that is the right one

Some of what you pay while owning comes back to you, and some of it doesn't. That distinction does all the work below.

The principal portion of your mortgage payment comes back: it's yours, sitting in the house, and you get it when you sell. Everything else is gone the way rent is gone. Interest is gone. Property tax is gone. Insurance is gone. A new roof is gone. And the return your down payment would have earned somewhere else is gone too, which is a real cost even though no one sends you a bill for it.

So the honest comparison isn't rent against the mortgage payment. It's rent against the unrecoverable costs of owning. Here is Priya's first year, using her actual numbers.

Rent on the equivalent house is $2,200 a month, or $26,400 for the year.

Now the choices behind that table, because each one is a choice rather than a fact, and you should be able to check every one. The forgone return is 4% a year on the money actually tied up in the house, which starts at the $88,000 of deposit and closing costs and grows as she repays principal. There is no HOA or condo fee in this example, because Priya is buying a house; if you are buying a flat, that fee is a large unrecoverable line, it rises, and it belongs in the table next to property tax. And the interest, tax, insurance and maintenance lines are charged at full cost, with no deduction. Mortgage interest and property tax can be deductible if you itemise, which would lower the true cost of owning; the reason this lesson does not model it is that since 2017 roughly nine filers in ten take the standard deduction and so get nothing from it, and lesson 6 taught you how to check which of the two you are. If you itemise, subtract your marginal rate from those two lines and the answer moves in favour of buying. The property tax rate of 1.2% used here is a little above the national average, which tilts against buying by a few hundred dollars a year, so use your own county's figure.

And the whole model runs prices and rents at the same 3%, which holds the price-to-rent ratio fixed for fifteen years. That is an assumption, not a neutral default: rents rising faster than prices shortens the break-even, as the sensitivity table shows, and the reverse lengthens it. One more choice, and it runs the other way: the model charges Priya 4% on the lump sum tied up in the house but does not credit the renter with a return on the monthly difference. Both sides are plain cumulative cash. Investing that difference would push the break-even out somewhat, so seven years is, on this point, generous to buying. And one thing the model leaves out in the renter's disfavour: moving costs. A renter who moves four times in fifteen years pays deposits, movers and overlapping rent, and none of that is in the rent line.

So the comparison flips completely. The mortgage payment was $281 a month cheaper than rent. The actual cost of owning is $734 a month more expensive, before anything has gone wrong and before she's paid a penny of transaction costs.

Two of those lines usually cause an argument, so let me defend them.

Maintenance at $6,000 is not pessimistic. The Harvard Joint Center for Housing Studies found that US homeowners spent an average of $7,100 on improvements and repairs in 2023, ranging from $3,100 in the lowest income fifth to $10,900 in the highest.¹ Those figures mix necessary repair with a new kitchen, so they aren't a pure maintenance number, and the popular "budget 1% of the value each year" rule has no evidence behind it that I could find. What is certain is that the number isn't zero, and a reader who leaves the line out has decided it is.

The forgone return is the line people most want to strike out, on the grounds that no money is leaving your pocket. But Priya has $88,000. If she buys, it sits in the house. If she rents, it sits in the index fund from lesson 5. Choosing the house means choosing not to have whatever that money would have earned, and lesson 4 was entirely about how much a sum like that grows when left alone. Leaving it out of the comparison is the same error as leaving out a cost.

What appreciation actually contributes, from the longest series anyone has built

The obvious objection to everything above is that owning has one line the table left out. The house goes up in value.

Sometimes. Here's what one long record says, from a Federal Reserve Bank of Philadelphia study that built a US housing price and return series covering 1890 to 2006.² Take "one" seriously: measuring house prices over a century is contested work, and this series finds roughly twice the real growth that Shiller's better-known index shows for the same span, with the disagreement concentrated in the 1950s to the 1970s. This lesson uses the more optimistic of the two. Across that whole period the average annual real return to owning housing was 8.6%. That number is regularly quoted in arguments about buying, and quoting it is a mistake, because of what it decomposes into:

• 7.3 percentage points of it is gross rental return, the value of the housing services the property provides, before the landlord pays tax, insurance and upkeep out of it.
• 1.3 percentage points is capital gain, the price going up faster than inflation.
• And capital gains were "close to zero until the 1940s, after which they averaged close to 2%".

Read that decomposition slowly. It does three things.

It kills "houses always go up". Averaged over the whole series, real prices rose about 1.3% a year, and for the first fifty years they barely rose at all. Since 1970 the picture is better, and the paper says so: capital gains grew to nearly a third of total returns over 1970 to 2006.

It also kills "housing is a rotten investment compared with stocks". The same study puts the total real return on housing at 9% against 11.5% for equities, with equity volatility three times larger, 17.6% against 5.4%. Its plainest way of saying the same thing: adjusting for inflation, "stock prices in 2006 were over ten times their 1890 level, while housing prices had increased by a factor of just under four". Housing is not a poor asset. It's a decent one with a low profile, which is what a separate and much-cited study of long-run returns on everything found too.

And it explains why an owner-occupier can't simply claim the 8.6%. The large part of that return is rent, and if you live in the house you consume it rather than banking it. What you consume is real value, and it is close to what the tenant pays $2,200 a month for, with one adjustment: the 7.3 points are gross, so the landlord's tax, insurance and maintenance come out of them, which are the same lines the table charges Priya separately, so the two halves of this lesson aren't double-counting each other. What's left is real value, and it doesn't accumulate anywhere you can spend it later. Over the whole series, the part that accumulates is the small part, and since 1970 it has been about a third of the total.

There is a second half to that sentence. Capital gains were near zero from 1890 to 1940, and then "they grew to nearly a third of total returns from 1970 to 2006". So the small long-run average contains a long flat era and a much better recent one, and which of those the next thirty years resembles is not knowable.

So the appreciation line belongs in the sum, at a number you choose and defend. Priya's arithmetic below runs everything at 3% a year: prices, rents, insurance, maintenance and inflation alike. That means it assumes no real appreciation at all, which is deliberately conservative against the 1.3% real in the record, and the table further down shows exactly what happens when you change it.

Transaction costs, and the horizon they create

The last piece is the one that makes this a question about time rather than a question about money.

Buying costs money: closing costs, inspection, title, appraisal, loan fees, perhaps 2% of the price. Selling costs much more. Agent commissions are the largest single item, and the rules around them changed on 17 August 2024, when a settlement removed offers of buyer-agent compensation from the MLS and required buyers to sign a written agreement with their own agent that states the fee, along with "a conspicuous statement that broker fees and commissions are fully negotiable and not set by law".³ Two things there are worth having in front of you before you meet an agent. The number is negotiable, and the settlement says so in terms. And the agreement you sign has to carry "a specific and conspicuous disclosure of the amount or rate of compensation", as an objective figure rather than an open-ended one, so you are entitled to see it written down as a number before you tour anything. I can't tell you what the average is now from any free primary source. The most-cited figure is a February 2026 agent survey by Clever Real Estate, a discount brokerage, which puts the national total near 5.7%; treat it as an order of magnitude from a company with an interest in the answer, not as a fact. Priya's sum below uses 7% for the whole cost of selling, commissions and everything else.

Buying and selling costs are paid once each, no matter how long you stay. Spread over one year they're crushing. Spread over fifteen, they're a rounding error. That's the entire reason there's a break-even holding period at all.

Doing it properly means totalling both paths year by year: for owning, all the unrecoverable costs plus buying and selling, minus whatever the house gained; for renting, the rent, rising 3% a year like everything else. The two curves cross.

The crossing is at about seven years. Stay less than that and Priya would have done better renting; stay longer and buying wins, and keeps winning by more every year.

Notice the shape of the owning line. It starts at $60,000 after a single year, which is not a mistake: leaving after one year means paying the full cost of buying and the full cost of selling inside that year. Then it rises gently, because the big costs are behind her. The rent line starts near zero and never stops climbing, and it climbs faster every year because rents rise.

The same house, three years or ten

The chart makes the point visually. Doing it in dollars makes it stick, and it's the same house and the same numbers throughout, so nothing changes except when Priya leaves.

She sells after three years. Owning has cost her $108,029 all in: the unrecoverable running costs, plus $8,000 to buy and $30,596 to sell, less the $37,091 the house gained. Renting the equivalent place for those three years cost $81,600. She's $26,430 worse off for having bought, which is most of a year's take-home pay, and it's almost entirely because she paid to get in and paid again to get out inside three years.

She sells after ten. Owning has cost $274,102, including a larger selling bill of $37,630 on a house now worth $537,567, less the $137,567 it gained. Renting for ten years cost $302,646, because rent kept rising while her mortgage payment did not. She's now $28,544 better off for having bought.

Same house, same market, same person. The only difference is how long she stayed, and the swing between the two is about $55,000.

The number the answer really turns on

The part that matters more than the seven comes next.

Change one assumption at a time and re-run the whole thing. Everything else stays exactly as it was.

Two of those rows deserve a note before the punchline. The maintenance row uses the bottom of the range in this lesson's own source, and it shortens the break-even by two years, which is a fair reminder that the $6,000 line I defended above is a choice and not a measurement. And the forgone-return rows are in nominal terms, which is why 7% appears rather than the 10% the checkpoint above argued was the fair nominal equivalent of a 7% real return; run it at 10% and the break-even goes to 16.4 years, which is the strongest case against buying that this model can produce.

Now look at the two appreciation rows. A two-point move in the appreciation rate, in either direction, swings the answer from three years to nineteen. The rent rows come next and span less than ten, and everything else on the list moves it by under four.

And appreciation is the one number in the whole calculation that cannot be known in advance. You can look up your property tax rate. You can get an insurance quote. You can negotiate a commission. You cannot find out what your house will be worth in seven years, and the Philadelphia Fed series above says the long-run real figure is small and was near zero for fifty years at a stretch, while any particular decade in any particular city can be wildly different in either direction.

So the honest summary of the rent-versus-buy arithmetic is this: the calculation is worth doing, and it is dominated by a term you have to guess. That's not a reason to skip it. It's a reason to do it three times, with a pessimistic guess, a middling one and an optimistic one, and to notice whether the answer changes. If buying wins under all three, the arithmetic isn't what should stop you, and what's left to weigh is everything in the next section that a calculation cannot price. If it only wins under the optimistic one, you're not making a housing decision, you're making a bet on house prices, and you should at least know that's what you're doing. In fairness, the other path is a forecast as well: the renting side of this comparison only wins by the margin shown if the money that isn't in a house earns what you assumed, and the return on an index fund is no more knowable than the return on a street. Both paths rest on a number nobody can look up. What the table above lets you say is how much each one matters: moving the forgone return across its whole plausible range, from a savings rate to a stock return, swings the answer by about five years, and moving appreciation swings it by nearly sixteen. Both are guesses. They are not the same size of guess, and one of them is a claim about a diversified index with a century of data behind it while the other is a claim about one house on one street.

Where the price-to-rent ratio helps, and where it doesn't

There's a quick market-level check worth knowing. Divide the price of a house by a year's rent for an equivalent one. Priya's is $400,000 divided by $26,400, which is 15.2.

As a rough guide, a low ratio means buying is comparatively cheap where you are and a high one means renting is. It's genuinely useful for the reason the sliders above show: rent is the second most powerful term in the calculation, so the relationship between prices and rents in your own city moves the break-even a long way.

What it can't do is tell you a market is overvalued. Economists have argued about that for decades and haven't settled it. The clearest illustration is from the Federal Reserve's own minutes in June 2005, quoted in a Cleveland and Boston Fed study of the question: house prices "might be somewhat above the levels consistent with the underlying factors, but measuring the extent of any overvaluation either nationally or in regional markets posed considerable conceptual and statistical difficulties".⁴ That was the committee with the best data in the country, eighteen months before the largest housing crash in modern history, saying they couldn't tell. The same study finds the relationship between interest rates and the price-to-rent ratio unstable in its own data, and argues that a rising ratio is a necessary condition for a boom driven by expectations, which is how it distinguishes the boom of the 2000s from the one in 2021: in 2021 almost all the growth came from rents rather than from the ratio.

The thing the arithmetic cannot price

Everything above is a calculation, and a calculation is an answer to the question "which costs less". People buy houses for reasons that don't reduce to money.

Security of tenure is the big one. A renter can be given notice because the owner wants to sell. That has a cost that never shows up in a spreadsheet and lands hardest on people with children in a particular school.

The freedom to change things is the one non-financial factor with a price tag attached, and it's in the maintenance line: most of that $7,100 average is improvement rather than repair, which is a thing owners buy and renters cannot buy at any price.

Mobility is the same factor pointing the other way. A house takes months to sell and costs 7% to leave. If your work might move you, that is the break-even horizon telling you something: a seven-year break-even is a bet that you'll still be there in seven years.

And forced saving is the argument that deserves more respect than this sort of analysis usually gives it. The renter in this lesson comes out ahead only if they actually invest the difference every month. Most don't. A mortgage payment is a savings plan that arrives whether or not you feel like saving that month, and it's enforced by consequences nobody ignores. That's a real advantage of buying, and it's a behavioural one rather than a financial one, which is exactly what lesson 2's evidence about automation would predict.

What people get wrong

"Renting is throwing money away." Renting buys you somewhere to live for a month, and the interest, tax, insurance and maintenance an owner pays buy the same thing and are equally gone. Only the principal is saving. Priya's first-year principal is $3,930, out of a total first-year outlay of $39,143.

"The mortgage payment is what owning costs." The interest inside it is a little over half of the unrecoverable total in year one, and it's the part the bank tells you about. The rest arrives as tax bills, insurance renewals and a boiler.

"You need 20% down." You don't. Below 20% on a conventional loan you'll generally pay private mortgage insurance, which protects the lender rather than you, and usually a slightly worse rate. It also ends: you can ask for cancellation when your balance is scheduled to reach 80% of the original value, the servicer must terminate it automatically at 78%, and it must end at the midpoint of the loan term regardless.⁵ So the real consequence of a smaller deposit is a cost with a defined end, not a refusal.

"Buying is always an investment." A house is consumption plus a leveraged, undiversified, illiquid asset. That's a description rather than an insult: leverage is why a modest gain on the whole house is a large gain on your deposit, and it's also why a modest fall wipes the deposit out. Undiversified means one asset in one street in one city, which is the opposite of what lesson 5 recommended for everything else you own.

"Prices always go up." Real prices in the US series above were roughly flat for the first fifty years. And the study of the 21st century quoted earlier records the round trip: real house prices rose about 60% from 2000 to 2005, then gave almost all of it back, before rebounding to end more than 100% above their 2000 level, against a previous quarter-century in which they never moved more than 20% from their 1975 base.⁴ Anyone who bought at the top of that and had to move in 2009 met the break-even arithmetic from the wrong side.

"If I can afford the payment, I can afford the house." The payment is the part with a fixed size. The roof isn't, and the range in this lesson's own source runs from $3,100 to $10,900 a year.

"A house is a liability, not an asset." It's both, which is what the year-one table shows: a stream of costs attached to a thing that is worth something. Calling it only a liability is the same error as calling it only an investment, with the sign flipped.

"Prices are high, so I'll wait for the crash." Sometimes that works. The trouble is timing it, and the price-to-rent section above has the Federal Reserve's own committee, in 2005, saying it could not measure whether prices were above their fundamentals. Waiting also has a price, and it is paid in rent every month you wait.

Three arguments the arithmetic leaves out

The calculation compares fifteen years of costs. Three of the strongest arguments for owning live outside that frame.

The payment ends and the rent does not. Priya's $1,919 is fixed for thirty years and then stops. Her rent is $2,200 now and, growing at 3%, is about $5,340 in thirty years and keeps going. The owner at seventy pays tax, insurance and upkeep on a house they own; the renter at seventy pays market rent out of a fixed income for the rest of their life. That asymmetry is invisible in a fifteen-year window and it is the reason a great many people buy. Note what it is not: it isn't an argument that owning is cheaper over the next seven years, and it only pays off if you hold long enough to get there.

The tax code treats the gain on your home unusually well. If you have owned and lived in a place for at least two of the last five years, you can exclude up to $250,000 of gain from your income, or $500,000 filing jointly, and you can do it again two years later.⁷ Priya's gain at 3% over seven years is about $92,000, and all of it is tax free. The renter's index fund gets no such treatment; the money they invest instead is taxed on its gains, though two things soften that: the tax is deferred until they sell, and long-term gains are taxed at 0%, 15% or 20% rather than at ordinary rates. And a caution on Priya's own $92,000, since the model runs 3% appreciation against 3% inflation: at zero real appreciation, what the exclusion shelters is a nominal gain that isn't real income at all. The advantage is real and it is smaller than the headline. The table above charged both sides at pre-tax rates, which is neutral only if they are taxed alike, and they are not.

One argument that sounds like a third and isn't, included because you will meet it and should know why it doesn't apply here. Economists point out that an owner-occupier receives their housing services untaxed while a landlord pays tax on rent received. True, and it doesn't tilt this comparison, because the sum above already credits Priya with those services in full by pricing them at the $2,200 a tenant pays for the same house. The argument bites against a landlord, not against a tenant. Knowing which comparison an argument belongs to is most of the skill here.

The argument about whether buying builds wealth

Two positions, both held by serious people, and the disagreement is narrower than it looks.

One position, held by most financial planners and by the housing industry, says yes, and the mechanism is forced saving plus leverage. Homeowners reach retirement with far higher median net worth than renters, a gap the Federal Reserve's Survey of Consumer Finances measures at close to an order of magnitude,⁸ and the reason isn't mysterious: a mortgage makes people save, and the modest real appreciation applies to the whole house rather than to the deposit, so it multiplies. On this view the analysis above is technically right and practically misleading, because it compares an owner against a renter who invests the difference, and that renter is largely hypothetical.

The other, associated with Robert Shiller and with a good deal of academic housing economics, says mostly no, once you subtract properly. The unrecoverable costs are large, the real capital gain is small, transaction costs eat a chunk of it every move, and what looks like accumulated wealth is mostly the forced saving. A renter who genuinely invests the difference does at least as well, with more liquidity and less risk concentrated in one asset.

What both accept, and what neither can fully get around, is the selection problem. The gap in net worth between owners and renters is real and is not evidence for either position on its own, because the people who become owners are also the people who had savings, stable income and good credit to begin with. Comparing the two groups measures who buys houses at least as much as it measures what buying houses does. Settling it would need a comparison of similar people who bought and didn't for reasons unrelated to their finances, which is hard to construct and is why the argument is still live.

There is also a live political argument about housing affordability, zoning, supply and the tax treatment of mortgage interest. This course takes no position on any of it. What it will say is that those arguments are about the price you face, and this lesson is about what to do once you're facing it.

How long people actually stay

One number, before you close the page.

Median homeowner tenure in the US was 12 years in 2025, up from 11.8 the year before, against about 6.5 years in 2005, and it varies a lot by city: about 20 years in Los Angeles, and shortest in the cheaper metros where people move more.⁶ Priya's break-even was seven.

So the typical owner clears a typical break-even comfortably, and the picture where renting wins is the picture of somebody who moves in four years. Both are real people. The lesson isn't that buying usually loses; it's that buying is a bet on staying put, and most people who make the bet turn out to be right.

Practice

Connections

Lesson 3 taught the difference between secured and unsecured debt, and a mortgage is the secured case in its purest form: the asset is the collateral, the rate is low because of that, and the consequence of not paying is losing the thing. Lesson 3's habit of asking where a payment actually goes is what shows you that Priya's first year is $19,093 of interest against $3,930 of principal.

Lesson 4 supplied the forgone-return line, which is the whole of the opportunity-cost argument, and it's also why the appreciation slider swings the answer so far: a small annual rate applied for years compounds in both directions.

Lesson 5 explains why "undiversified" is a real criticism of a house rather than a technicality, and lesson 8 put homeowner's insurance in the table, where it's a line item you now know how to read.

Lesson 1's discipline about what a statistic measures gets its hardest workout here, twice. The 8.6% return is mostly rental return rather than appreciation. And the net worth gap between owners and renters measures who buys as much as what buying does.

Lesson 10 closes the course by defending everything the other nine built, which by this point includes the largest transaction in it.

Go deeper

• The Price of Housing in the United States, 1890 to 2006, Philadelphia Fed working paper. Long, but the summary on its first pages is where a buyer should start.
• CFPB's Buying a House tools, including the loan estimate explainer and the closing-cost checklists. Written by the regulator, free, and specific about what each fee on a form is for.
• NAR on what the 2024 settlement changed. They are a party to it, so read it for the mechanics of what you'll be asked to sign rather than for the effects.
• Kapoor, Dlabay and Hughes, Personal Finance, chapter 9. The standard textbook treatment of the housing decision, including the mortgage-selection material this lesson leaves alone.

Sources

[1] Harvard Joint Center for Housing Studies, Improving America's Housing and the Leading Indicator of Remodeling Activity; average homeowner spending on improvements and repairs of $7,100 in 2023, $3,100 in the lowest income fifth and $10,900 in the highest. https://www.jchs.harvard.edu/research-areas/remodeling . These figures mix improvement with repair, which is why this lesson uses them as a scale rather than as a maintenance budget.

[2] Ronan C. Lyons, Allison Shertzer, Rowena Gray and David Agorastos, "The Price of Housing in the United States, 1890 to 2006", Federal Reserve Bank of Philadelphia Working Paper 24-12, June 2024, revised October 2025; average annual real housing return of 8.6%, decomposing into 7.3 points of gross rental return and 1.3 points of capital gain, capital gains "close to zero until the 1940s, after which they averaged close to 2%", and total real returns of 9% for housing against 11.5% for equities with standard deviations of 5.4% and 17.6%. https://www.philadelphiafed.org/-/media/frbp/assets/working-papers/2024/wp24-12.pdf

[3] National Association of Realtors, "What the NAR settlement means for home buyers and sellers"; the rules effective 17 August 2024, the removal of compensation offers from the MLS, the required written buyer agreement, and the statement that "broker fees and commissions are fully negotiable and not set by law". NAR is a party to the settlement. https://www.nar.realtor/the-facts/what-the-nar-settlement-means-for-home-buyers-and-sellers

[4] Lara Loewenstein and Paul S. Willen, "House Prices and Rents in the 21st Century", NBER Working Paper 31013, March 2023, by economists at the Federal Reserve Banks of Cleveland and Boston; the June 2005 FOMC minutes quoted in the paper, the instability of the interest rate and price-rent relationship in their data, and the distinction between the 2000s boom and the 2021 boom. https://www.nber.org/papers/w31013

[5] Consumer Financial Protection Bureau, "What is private mortgage insurance?" and "When can I remove private mortgage insurance from my loan?"; PMI required below a 20% down payment on a conventional loan, protecting the lender rather than the borrower, cancellable on request at 80% of original value, terminated automatically at 78%, and ended at the midpoint of the amortisation schedule. https://www.consumerfinance.gov/ask-cfpb/when-can-i-remove-private-mortgage-insurance-pmi-from-my-loan-en-202/

[6] Redfin analysis of county records; median US homeowner tenure of 12 years in 2025, 11.8 in 2024 and about 6.5 in 2005, with about 20 years in Los Angeles. A commercial source with a stated method, named here because no federal series measures this directly. https://www.redfin.com/news/homeowner-tenure-12-years/

[7] Internal Revenue Service, Topic 701, "Sale of your home"; the exclusion of up to $250,000 of gain, or $500,000 on a joint return, subject to owning and using the home as a residence for at least 24 months of the previous five years, and not having used the exclusion in the two years before. https://www.irs.gov/taxtopics/tc701

[8] Federal Reserve Board, Survey of Consumer Finances, for the net worth gap between homeowners and renters. The gap is not in dispute; what it means is, which is the subject of the section it appears in. https://www.federalreserve.gov/econres/scfindex.htm

Every dollar figure in the worked example is an invented round number chosen to make the arithmetic visible, and all of the calculations in this lesson were computed rather than estimated. Mortgage rates, house prices, property tax rates and commissions all change; check Freddie Mac's rate survey and your own county's rate rather than any figure printed here. The Census Bureau's American Community Survey and the Tax Foundation's property tax tables both publish local effective rates.