The rulebook · Form RB-12
How Long to Stay in a House Form RB-12
The transaction costs — about 3% to buy, 8% to sell — are the reason buying almost never wins for short stays. Here is the year-by-year drift on a $450,000 home against $2,200 rent, so you can see exactly when the equity catches up.
1The early years are a hole
After year 1, the buyer is $45,165 behind — the $103,500 of down payment and closing costs is mostly still buried, and only one year of equity has been dug out. This is the year everyone feels: the new homeowner is richer on paper and poorer in the bank account.
3Year 3: still renting’s game
By year 3 the gap has narrowed to $33,158 — equity is compounding (the home has appreciated to about $491,000 and the loan balance is falling), but the renter’s running total is still far lower. If your job might move you in three years, this is your answer.
7Year 7: the flip
Year 6 closes to $6,132. Year 7 crosses — buying finishes $5,476 ahead. Nothing magical happens in year 7; it’s just the year the cumulative equity (now about $227,945) finally outweighs the cumulative transaction and ownership costs. The famous “stay at least 5 years” advice is this curve, rounded.
- After 1 yearrenting ahead by $45,165
- After 3 yearsrenting ahead by $33,158
- After 5 yearsrenting ahead by $16,406
- After 6 yearsrenting ahead by $6,132
- After 7 yearsbuying ahead by $5,476
Cheap rent ($1,500) stretches the flip to year 16; expensive rent ($3,500) pulls it to year 3. Your horizon is a guess — so run it at a few and see how much the guess has to be wrong to change the answer.
Common questions Form RB-12
How long do you need to live in a house to make buying worth it?
With typical assumptions, around 5 to 10 years. On a $450,000 home against $2,200 rent, renting is still ahead by $16,406 in year 5 and the flip comes in year 7. Cheap rent stretches it to year 16; expensive rent pulls it to year 3.
Why does buying lose for short stays?
Transaction costs: roughly 3% of the price to buy (closing) and 8% to sell (agent commissions and fees). On $450,000 that’s about $49,500 of costs that build zero equity — it takes years of principal paydown and appreciation to dig out of that hole.
Is the 5-year rule true?
It’s a rounded version of this curve. Five years is where the gap usually gets small enough that local prices and your exact rent decide it — it’s not a guarantee, and on expensive-coast ratios it’s not even close.
What if I might move in 2 years?
Rent. Seriously. Two years doesn’t even get past the selling costs, let alone the buying ones. The math is not close.