Rent vs Buy · Updated June 2026
Long-Term: Rent-Stabilized vs Buying
A rent-stabilized Manhattan one-bedroom at $2,340/month against a comparable $850,000 condo purchase is barely a contest: the condo's all-in cost runs $7,907/month (mortgage at 6.3%, $1,200 common charges, taxes, maintenance) – a $5,567/month gap that, invested at 7% alongside the $170,000 down payment, grows to $1,967,425 in 15 years versus the buyer's $806,548 of post-costs equity.
The economic frame that clarifies everything: a stabilized lease $2,060/month below market is an asset – a tax-free annuity of $24,720/year whose payout grows whenever board-approved increases (2.75–3.25% recently) lag market rent growth. Surrendering it to buy is selling that annuity for $0.
Long horizons compound the discount: a stabilized lease at 3% increases against market growth of 4–5% widens the spread every year – 20-year tenants in Manhattan routinely sit on $2,000+/month discounts that no purchase can replicate.
Rent vs buy calculator · 2026
Verdict at your horizon
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- Mortgage P&I
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- Owner all-in /mo
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- Cash needed upfront
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- PMI
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- Buyer net worth
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- Renter net worth
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- Interest paid by then
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- Price-to-rent ratio
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Net worth year by year
Renter invests the down payment + closing costs + monthly difference at your chosen return. PMI of 0.55%/yr is added automatically while the down payment is under 20% and equity is below 20%. Price-to-rent under ~15 usually favors buying; over ~20 favors renting.
Key insights
Key insights
- Stabilized $2,340 vs condo all-in $7,907/mo: a $5,567/mo gap.
- 15-year outcome: renter $1,967,425 vs buyer $806,548.
- The $2,060/mo discount ≈ a $706,286+ present-value asset.
- Board increases (2.75–3.25%) vs market growth widen the discount yearly.
- Buyout offers should be priced against the annuity PV – most fail.
| Year | Buyer net worth | Renter net worth (invested) | Buying advantage |
|---|---|---|---|
| 1 | $128,466 | $267,791 | -$139,325 |
| 3 | $202,843 | $427,026 | -$224,183 |
| 5 | $283,605 | $608,104 | -$324,499 |
| 7 | $371,353 | $814,140 | -$442,787 |
| 10 | $517,542 | $1,177,937 | -$660,395 |
| 15 | $806,548 | $1,967,425 | -$1,160,877 |
Pricing the stabilized discount properly
Value the lease like an income stream: $2,060/month discount × 12 = $24,720/year, growing ~1.5%/year (market growth minus board increases), discounted at 5% → a present value north of $706,286. That phantom asset belongs in any honest net-worth comparison – and explains why stabilized tenants who "can afford to buy" rationally don't.
The risks that discount the annuity: deregulation exposure (largely closed by the 2019 HSTPA for NYC), buyout offers (price them against the PV above – most are lowball), building sale/harassment dynamics, and life changes that outgrow the unit. Succession rights, properly maintained, extend the annuity a generation.
When buying still wins against a stabilized lease
Three legitimate cases: the unit no longer fits (family growth – though pricing a larger stabilized swap first is mandatory), the buyout offer genuinely exceeds the annuity PV (rare, but six-figure offers in conversion buildings can), or you're buying a different market entirely (keeping the NYC lease as a pied-à-terre violates primary-residence rules – the lease and the distant purchase can't coexist).
Otherwise the strategy is keep-and-invest: the $5,567/month ownership premium you're not paying, automated into index funds, builds the down payment for a future purchase on your timeline – with the stabilized lease as the option that keeps every door open.
FAQ
Frequently asked questions
Should I give up a rent-stabilized apartment to buy?
Almost never on financial grounds: the modeled 15-year gap favours keeping the lease by $1,160,877. Legitimate exceptions: the unit no longer fits your life, or a buyout offer exceeds the discount's present value ($706,286+ here).
How much is a rent-stabilized lease worth?
Price the discount as an annuity: (market rent − your rent) × 12, growing with the market-vs-board spread, discounted at ~5%. A $2,060/month discount values above $706,286 – more than most down payments.
Can my stabilized rent rise to market?
Under NYC's post-2019 framework (HSTPA), high-rent deregulation is abolished: increases follow the Rent Guidelines Board (2.75–3.25% recently) plus limited improvement surcharges. The discount is structurally durable.
What about co-ops as the cheaper buying route?
Co-op maintenance ($1,200–$2,500/month, including building tax and often an underlying mortgage) is exactly the carry that loses to a stabilized lease. The lower sticker price flatters; the monthly stack doesn't.
Does this logic apply outside NYC?
Anywhere a lease sits meaningfully below market: SF rent control (CPI-capped), LA RSO units, Berlin's older Mietspiegel contracts, or any below-market arrangement. Substitute your discount in the calculator – the annuity math is universal.
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