I Ran the Numbers on Renting vs. Buying in Seattle. Renting Won Every Time.

A $900K house, a 6.75% mortgage, and $180K in cash for a down payment. What if you rented instead and invested that money in the S&P 500? I modeled every scenario from 5 to 30 years. The results weren't even close.

Everyone has an opinion on renting versus buying. Your parents say buying builds wealth. Your coworker says renting is throwing money away. The internet says it depends on your market.

Almost nobody runs the actual numbers.

I did. After breaking down the hidden costs of a $900K Seattle house, the most common question I got was: "Okay, but what if you just rented instead?"

Fair question. So I modeled it — same house, same neighborhood, same timeline. Buying versus renting plus investing the difference in the S&P 500. Every year from 5 to 30.

Here's what I found.

The Setup

I wanted this to be an apples-to-apples comparison, so let me show you every assumption upfront. You can judge for yourself whether they're fair.

The house (buying scenario):

• Typical 4-bed home on Seattle's Eastside, listed around $900K
• Down payment: 20% ($180K)
• Closing costs: 2.5% ($22.5K)
• Mortgage: 30-year fixed at 6.75% — monthly P&I: $4,670
• Property tax: 0.95%/year | Insurance: $2,400/year | Maintenance: 1%/year
• Home appreciation: 4%/year (Seattle metro historical median)
• Selling costs: 6% (agent commissions + taxes)

The alternative (renting scenario):

• Rent: $3,500/month for a comparable 4-bed in the same area (Zillow median), plus ~$30 renter insurance = $3,530 total housing cost
• Rent increases: 4%/year
• The $202.5K you would have spent on down payment + closing costs goes into the S&P 500 on day one
• Every month, the difference between what a buyer pays and what you pay in rent also goes into the S&P 500
• S&P 500 return: 10%/year (historical average including dividends, nominal). Note: 10% is the ~100-year historical average. Some analysts believe future returns may be lower (7-8%) based on current valuations. The sensitivity analysis below covers that scenario — check the 7% column for a more conservative estimate.

What we're comparing: At the end of N years, how much disposable wealth does each person have? For the buyer, that's the cash you walk away with after selling the house, paying off the remaining mortgage, and covering selling costs. For the renter, that's your investment portfolio value.

All figures are nominal (not inflation-adjusted).

The Core Result

Read that last row again. After 30 years, the renter who invested in the S&P 500 has $3.6 million more than the buyer.

A note on that number: these are nominal dollars. Adjusted for inflation at 3%, that $3.6M in 2056 dollars is roughly $1.5M in today's purchasing power. Still a massive gap — but don't let the raw number mislead you. The point isn't the exact dollar amount. It's the direction and magnitude.

And it's not just the long term. Even at 5 years — the shortest holding period — renting wins by $123K.

Why the Gap Is So Large

Three forces compound against the buyer:

1. The opportunity cost of the down payment is enormous.

That $202.5K in upfront cash (down payment + closing) isn't just money you spent — it's money that stops compounding. In the S&P 500 at 10%, that sum alone grows to $525K in 10 years and $3.5M in 30 years. When you put it into a house appreciating at 4%, you're giving up 6 percentage points of annual growth on a six-figure sum. Year after year.

2. The monthly cost gap feeds the compounding machine.

In year one, the buyer pays $5,616/month (mortgage + property tax + insurance + maintenance). The renter pays $3,530 (rent plus renter insurance). That's $2,086 per month going into the renter's investment account instead. Even as rent rises over time, the gap persists for years because the buyer's hidden costs (property tax, maintenance) also rise with the home's value.

3. Compound interest is nonlinear — and 30 years is a long time.

At 10% nominal, money roughly doubles every 7 years. The renter's early investments have decades to compound. The buyer's equity is locked in a slower-growing asset. By year 20, the math becomes overwhelming. By year 30, it's not even a contest.

"But What About the Mortgage Interest Tax Deduction?"

This is the first thing people bring up — and it's a fair point. Mortgage interest is tax-deductible, which effectively lowers the cost of buying.

The model accounts for this. At a 32% marginal tax rate, the 30-year cumulative tax savings come to roughly $133K. That's real money.

But here's the catch: with the current standard deduction at $30,050 for married filing jointly, you only benefit from the mortgage interest deduction when your itemized deductions exceed that threshold. In the early years when interest payments are highest, you clear it. But as you pay down the mortgage, the benefit shrinks and eventually disappears.

Bottom line: The tax shield helps, but it doesn't change the direction. Renting plus investing still wins decisively at every time horizon.

What If You Don't Invest in the Stock Market?

Here's where it gets interesting — and where the "renting always wins" narrative breaks down.

Not everyone is going to put their down payment into index funds. Some people would put it in a high-yield savings account or Treasury bonds. What happens then?

Scenario: Renter invests at 4% (risk-free rate)

The result flips. If you're not actively investing the difference, buying wins after about 10 years — and the advantage grows dramatically over time.

This is the single most important insight in this analysis: the answer to "should I rent or buy?" depends entirely on what you do with the money you don't spend on a house.

If you invest aggressively (S&P 500 at 10%), renting wins at every time horizon. If you save conservatively (4%), buying wins in the medium to long term. The house isn't just competing against rent — it's competing against your alternative investment.

The Full Picture: When Does Buying Win?

Here's the sensitivity matrix. Find your assumptions and see the answer:

The pattern is clear:

• At S&P 10% (historical average), renting wins in almost every scenario — unless home prices rise 5%+ annually AND you hold for 10+ years
• At 7% investment returns, it's close — the answer depends on holding period and home appreciation
• At 4% (savings/bonds), buying wins after 10 years in most scenarios — the house's leverage advantage dominates when the alternative is low-return savings

What the Numbers Don't Capture

I've spent this entire article showing you why renting plus investing is, by the numbers, the financially superior choice under most assumptions. But I'd be dishonest if I stopped there.

When a reader commented on my last article, they said something that stuck with me: "People only know 'price.' It's hard to know 'value.' Supply and demand determine the price, but figuring out value — that's something you have to think through yourself."

They're right.

Renting means your landlord can sell the property. It means moving when your lease ends. It means asking permission to paint a wall. It means your kids might change schools because someone else made a financial decision.

Buying means a yard that's yours. A kitchen you can renovate. A neighborhood you commit to. Stability that compounds in ways no spreadsheet can model — in friendships, in community, in the feeling of walking through a door that nobody can take from you.

I'm still looking at houses. Not because I can't read a spreadsheet — but because some things matter more than the optimal financial outcome. The data doesn't tell you what to want. It tells you what it costs. And there's a big difference.

The Real Question

The answer to "should I rent or buy?" was never really about math. The math just removes the fog.

Now you know: if you're disciplined enough to invest the difference, renting is financially superior by a wide margin. If you're honest that the money would sit in savings, buying is a reasonable forced-savings mechanism that beats low-return alternatives over time.

But the real question was always: what kind of life do you want to live?

The numbers can't answer that. Only you can.

The data in this article is based on a typical 4-bedroom home on Seattle's Eastside (~$900K), 6.75% mortgage rate, 20% down payment, S&P 500 historical average return, and Zillow median rent for the same area. All figures are nominal (not inflation-adjusted). Specific numbers will vary by market, but the analytical framework applies broadly.

Previously in this series: I ran the numbers on a $900K Seattle house — the results were sobering. Subscribe for free to get the next one.