Comment by sokoloff

> where the mortgage payment on a house would be $2600/mo but the rent for the identical one next door is $2000 is going to swing heavily toward renting

I think those figures point towards buying being favored, especially if the mortgage payment is PITI, but even if it's principal and interest only, I think buying is likely to be better in the long-term if the spread is that small.

Maintenance is not going to run 5% of the purchase price on average, except in the most extreme low-cost housing situations. A house that sold for ~$500K (as would be implied by a $2600 mortgage payment) is not going to cost $500K in maintenance over the next 20 years (as 5% would imply) and certainly not over the next 10 (as 10% would).

You may have an individual year that's over 10%, but that's a cashflow issue not an overall cost issue.

The advantage of renting is the flexibility, lack of commitment to a specific house or area, and the lack of need for a large upfront sum (in this example, renting might need $6K upfront [$2K of which is the first month's rent], while buying might need traditionally $100K to avoid PMI or ~$20K on an FHA first-time buyer mortgage and associated transaction costs).