The Morning: A new rent-versus-buy calculator

The New York Times <>

2024-05-13 12:30

Plus, Israel, Ukraine and psychedelic churches.
The Morning

May 13, 2024

Good morning. We’re covering The Times’s rent-buy housing calculator — as well as Israel, Ukraine and psychedelic churches.

A graphic showing sliding scales for Home Price and Monthly Rent
The New York Times

Running the numbers

It is the biggest financial decision for many younger adults: Should I rent a home or buy one? The decision is especially difficult these days, with both interest rates and rents having risen in the past few years.

To help people understand the trade-offs, The Times has just relaunched its popular rent-versus-buy calculator. Even if you already own your home — or are a committed renter — you may enjoy playing with the calculator and learning a few things about the real estate market. I did.

The calculator, which The Times’s Upshot section built, has been updated in several important ways, including to take into account the 2017 tax law that affected the mortgage-interest deduction.

Ultimately, the calculator can’t tell you whether you should rent or buy. That decision depends on the future paths of home prices and rents, which are unknowable. It also depends on your life stage — a factor that too many people fail to consider when making this decision. If you know you will move again a few years from now, for instance, buying is almost certainly a mistake.

Here are a few other points that the calculator helps highlight:

1. It’s OK to rent

I know that many people feel guilty about renting — as if it’s an inherently inferior decision that wastes money. That’s wrong (as I explained on a recent “Daily” episode). When house prices are high, as they are in most parts of the U.S., buying often wastes more money because of broker’s fees, mortgage interest, house repairs and other costs of owning.

“At this time, in the majority of circumstances, renting likely makes more economic sense than buying,” said Mark Zandi, the chief economist at Moody’s Analytics, who has advised our work on the calculator over the years. He notes that the typical monthly mortgage is about $2,000 today, more than double what it was when the pandemic hit in early 2020.

Rents have risen, too, but not nearly as much. And many new rental units are coming on the market, which should hold down rents in the near future. The new units include higher-end, multifamily developments, like a 15-story, 1,111-unit complex on South Broad Street in Philadelphia.

2. An overrated deduction

The 2017 tax law reduced the advantages of owning a home in a way that many people have not fully recognized, said my colleague Francesca Paris, who helped build the new calculator. Francesca, who’s a renter, told me that she herself didn’t understand this dynamic until she worked on the calculator.

First, a bit of background: Taxpayers must choose between taking one large deduction, known as the standard deduction, and a series of individual deductions, known as itemized deductions, like the one for mortgage interest. If the standard deduction is more valuable to you, the itemized deductions become irrelevant.

The 2017 tax law, which was Donald Trump’s main domestic legislation, was mostly a tax cut, and it increased the value of the standard deduction. But the law also effectively reduced the value of itemized deductions in states with high taxes, like California, Illinois and New York. (Doing so created an incentive for states to cut their own taxes, a longtime goal of conservatives.)

This combination means that many homeowners now save more money by taking the standard deduction rather than itemized deductions. For them, the mortgage-interest deduction has become irrelevant.

3. The break-even rate

The calculator allows you to see the break-even mortgage rate that would make buying or renting more affordable (if the economy followed an expected path). In many situations, that break-even rate is between 4 percent and 5 percent, Francesca noted.

The average rate on a 30-year fixed mortgage is 7 percent today, up from less than 3 percent in early 2021 — which is a big reason that renting is often the smarter choice now.

4. When to buy

Buying will still make sense for some families. Home prices in large parts of the country — including New Orleans, Pittsburgh, St. Louis, upstate New York — are more reasonable. And even in expensive markets, families that are confident that they are going to remain in the same home for a decade or longer may prefer to own even if doing so costs extra.

For people tempted to buy, Zandi encourages looking at new construction. Prices of older homes haven’t fallen much as mortgage rates have risen, because owners can simply decide not to sell if they don’t get an offer they like. Developers are more likely to cut a deal. They lose money when homes sit empty, and many have cut the price of newly built homes, as the financial writer Wolf Richter has noted.

Use the calculator to explore these dynamics. As the housing market changes, you can check back to see how your calculations change.

Related: An “assumable mortgage,” which allows a buyer to take over a seller’s mortgage, is becoming more popular in this era of high interest rates.


Election Polls

  • Trump leads President Biden in five battleground states, and Gaza and the economy have hurt Biden among young and nonwhite voters, polls found.
  • Democrats lead their Republican rivals for the Senate in Arizona, Nevada, Pennsylvania and Wisconsin — races that could decide control of the chamber.
  • The polls shows a pattern of people splitting tickets. That might be good news for Biden: Voters haven’t abandoned him in full, Nate Cohn writes.

Israel-Hamas War

A group of soldiers walk in a single file.
Israeli soldiers near Gaza. Amir Cohen/Reuters
  • Israel has not offered a plan to govern Gaza after the war. Secretary of State Antony Blinken warned yesterday that without such a plan, it’s likely Hamas would eventually regain power.
  • For years, a secret police force overseen by Hamas has spied on Palestinians, according to a Times investigation.
  • U.S. officials said that Yahya Sinwar, the top Hamas leader, was not hiding in Rafah, in southern Gaza. The intelligence could undercut Israel’s rationale for a major operation there.
  • In the past week, the flow of aid into Gaza has almost entirely stopped, according to the U.N.
  • Israel is observing Memorial Day, an annual commemoration that has taken on greater significance after the Hamas-led attacks.

Campus Protests

War in Ukraine

A man standing next to a dog, and a person lying on a mat, watching a building burn.
After an airstrike in Vovchansk, Ukraine. Evgeniy Maloletka/Associated Press
  • Vladimir Putin replaced the defense minister who had led Russia’s military since the start of the war. The new defense chief is an economist.

More International News

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In Rome. 

Other Big Stories

  • On Instagram, a children’s jewelry ad drew solicitations for sex with a 5-year-old, a Times report found. The investigation suggests that the app’s algorithms play an important role in directing men to photos of children.
  • The former Trump lawyer Michael Cohen once called himself Trump’s “designated thug.” Today, he is set to testify against the former president. Read what to expect.
  • A man died two months after he became the first person to receive a kidney from a genetically modified pig. The hospital said it had “no indication” his death was related to the transplant.
  • Minnesota and parts of Wisconsin are under an air quality alert because of wildfire smoke from Canada.


Federal law today discriminates against disabled people who marry or work, Pepper Stetler writes. Congress can fix the problem.

Gail Collins and Bret Stephens discuss commencement season and Trump’s hush-money trial.

Here are columns by David French on becoming a grandfather, and Maureen Dowd on Stormy Daniels and Trump.

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Two children wearing bicycle helmets lean forward in colorful soapbox cars, blurred as they race past spectators.
Vroom! Gabriela Bhaskar for The New York Times

Small cars, small drivers: Go inside the intense competition to represent New York City at the international soapbox derby championship.

Ask Vanessa: “Should I get rid of my clothes after a divorce?”

Punctuation: A town in England dropped apostrophes from its street signs. Some residents aren’t happy.

McHaters: “Super Size Me,” a documentary released 20 years ago, led to a backlash against McDonald’s. It didn’t stick.

Metropolitan Diary: St. Patrick’s Day, ’78.

Lives Lived: Roger Corman was a prolific director and producer of low-budget cinema who helped start the careers of Martin Scorsese and Francis Ford Coppola. He died at 98.


N.B.A.: The Denver Nuggets defeated the Minnesota Timberwolves, 115-107, to even their series at 2-2. Indiana and New York are also tied at 2-2 after the Pacers blew out the Knicks, 121-89.

N.H.L.: The Florida Panthers outlasted the Boston Bruins, 3-2, to take a 3-1 series lead. The Carolina Hurricanes defeated the New York Rangers, 4-3, but the Rangers are ahead in the series, 3-1. And the Dallas Stars held off the Colorado Avalanche to win 4-1, moving 2-1 ahead in the series.

College softball: For the first time in years, the Oklahoma Sooners are not the No. 1 seed in the N.C.A.A. softball tournament — their longtime rival, Texas, claimed the top spot.


People stand on a lawn with hands clasped in front of them.
A psychedelic retreat in Texas. Meridith Kohut for The New York Times

As psychedelics show promise in the treatment of depression and addiction, a number of organizations that describe themselves as churches are offering the compounds to followers. It’s a wide field: Some organizations merely sell psychoactive drugs online, while others are congregations that hold regular worship services.

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Anya Taylor-Joy Ariel Fisher for The New York Times


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Christopher Testani for The New York Times

Bake a delicious meatloaf with a tangy tomato glaze.

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Here is today’s Spelling Bee. Yesterday’s pangrams were clementine and inclement.

And here are today’s Mini Crossword, Wordle, Sudoku, Connections and Strands.

Thanks for spending part of your morning with The Times. See you tomorrow. — David

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