Here’s an excellent Buy/Rent comparison calculator on the New York Times site. It lets you enter rent value / purchase value, interest rate, property taxes and then adjust sliders for house appreciation and rent increases.
What with recent complaints about ‘affordability’ in the lower mainland I was curious about how some local real estate would compare, so I entered some number for this house I found on craigslist since it listed a selling price and current leased rental income.
With rental income of $1170 and an asking price of $419,800 you get some interesting results by playing with sliders on that calculator. for instance: 25% down payment at 6.25% interest rate – if the house appreciates by 10% a year over 30 years you’re better off buying after just one year, but if the house appreciates an average of 5% a year over 30 years you’re better off renting.
There are a lot of variable there – if you have some numbers from the local market its worth plugging them in and checking out the results.
Note: Since this is a US site I assume they are taking into account the mortgage tax write off, which we don’t have here in Canada.
UPDATE: dingus points out this Canadian buy/rent calculator.