Should you rent or buy if you plan to call Cary home for the next five years? It is a big decision, especially if you are relocating and trying to make sense of prices, rents, and interest rates. You want a clear, practical way to compare your real costs over time so you can choose with confidence.
This guide gives you a simple five‑year break‑even framework you can run with Cary inputs, a worked hypothetical example, and the key factors that move the outcome. You will finish with a checklist and next steps tailored to how long you plan to stay and what matters most to you. Let’s dive in.
What a five‑year break‑even means
A five‑year break‑even compares the total cost of owning a home for five years to the total cost of renting for the same period. It adds up all the cash you put in, adjusts for tax effects, and then, for buying, subtracts what you could net if you sold at the end of year five.
What you count on the buy side
- Upfront cash at purchase: down payment and buyer closing costs.
- Annual costs: mortgage payments, property taxes, insurance, HOA (if any), and maintenance.
- Tax effects: possible savings from mortgage interest and property taxes if you itemize.
- Net at sale in year five: estimated sale price, minus typical selling costs and your remaining loan balance.
What you count on the rent side
- Monthly rent, plus any renter’s insurance and utilities you pay.
- The opportunity to invest the cash you would have used for down payment and closing costs. That invested amount grows while you rent and offsets some rent paid.
Buying comes out ahead if the five‑year total cost of owning is lower than the five‑year total cost of renting under your assumptions.
Gather Cary‑specific inputs
Use local data so your model reflects Cary, not national averages. These sources are trusted starting points:
- Mortgage rates: check the weekly snapshot on the Freddie Mac Primary Mortgage Market Survey.
- Historical home price trends: review the FHFA House Price Index for state and metro context when setting appreciation scenarios.
- Property taxes: confirm Wake County’s rates and how assessments work with the Wake County Tax Administration.
- Homeowners insurance: get two to three quotes for Cary ZIP codes from local carriers.
- Rents: benchmark similar homes and apartments, and consider HUD’s Fair Market Rents as a reference point.
- Local demand drivers: note major employers, projects, and infrastructure on the Town of Cary Business & Development pages.
- Tax rules: read the IRS on the mortgage interest deduction in Publication 530 and the primary residence sale exclusion in Topic No. 701.
Tip: If you are comparing specific Cary neighborhoods, pull HOA details from listings, and adjust maintenance if you are eyeing a newer home versus an older property.
Build your five‑year model in 6 steps
- Set your purchase inputs
- Price, down payment percent, loan term, interest rate, and buyer closing cost percent. Note PMI if putting less than 20 percent down.
- Add recurring owner costs
- Annual property taxes, homeowner’s insurance, HOA fees, and a maintenance allowance. A simple rule of thumb is 1 percent of price per year, adjusted for age and condition.
- Estimate tax effects
- If you itemize, estimate savings by multiplying deductible mortgage interest and property taxes (subject to SALT limits) by your marginal tax rate. If you take the standard deduction, set this to zero.
- Model rent and investment
- Start with today’s monthly rent for a comparable property and choose a rent growth rate. Add renter’s insurance and utilities. Invest the hypothetical down payment and buyer closing funds at an assumed after‑tax return.
- Add the year‑five sale
- Choose three appreciation scenarios, estimate a sale price, subtract typical selling costs, and net out your remaining mortgage balance. That gives expected sale proceeds.
- Compare totals
- Sum owner cash outflows over five years, subtract the sale proceeds, then compare to total rent paid minus the value of your invested funds. The lower total is your financial winner under those inputs.
A hypothetical five‑year example
The example below is illustrative so you can see how the math works. It is not Cary‑specific data. Plug in current Cary numbers before making decisions.
Inputs (illustrative only):
- Purchase price: 450,000 dollars with 20 percent down, 30‑year fixed at 6.5 percent, buyer closing costs at 2.5 percent.
- Annual costs: property taxes at 1.0 percent of price, homeowners insurance at 1,200 dollars, maintenance at 1.0 percent, no HOA in baseline.
- Sale assumptions: selling costs at 6 percent of sale price, appreciation scenarios at 0 percent, 3 percent, and 5 percent.
- Tax: marginal rate at 24 percent for an itemizing case and 0 for a standard deduction case.
- Rent: 2,100 dollars per month growing 3 percent per year.
- Investment return on the down payment if renting: 4 percent annual.
What the patterns typically show over five years:
- With 0 percent appreciation, buying often costs more than renting after you account for transaction costs and maintenance.
- With 3 percent appreciation, the break‑even gets close. Your itemizing status, HOA fees, and interest rate can tip the result either way.
- With 5 percent appreciation, buying more often comes out ahead by year five, especially if rent growth is strong.
Your outcome will differ with Cary inputs for price, HOA fees, taxes, insurance, and your tax situation. Small tweaks to appreciation, rent growth, or rate can change the answer.
What moves the break‑even most in Cary
- Appreciation rate: the biggest swing factor on a five‑year view. A 1 to 2 percent change per year can shift results from buy to rent.
- Mortgage rate: higher rates raise early interest costs. Rate changes also affect what you can afford and how fast you build equity.
- Time horizon: the shorter your stay, the harder it is to overcome transaction costs at resale.
- Rent growth: faster rent increases favor buying because renting gets more expensive over time.
- Down payment: larger down payments reduce interest and PMI but increase the opportunity cost of capital.
- HOA and maintenance: high fees or higher upkeep tilt toward renting unless other factors compensate.
- Selling costs and market liquidity: typical commission and time to sell matter since they reduce net proceeds in year five.
Personal checklist before you decide
- Time in home: Can you see yourself in Cary for at least five to seven years if life goes as planned?
- Mobility: Do you need flexibility for a potential job change or relocation?
- Cash comfort: Will a down payment leave you with an emergency fund and moving budget?
- Monthly budget: Are you comparing apples to apples on utilities, lawn care, parking, and HOA?
- Tax profile: Will you itemize, or will you likely take the standard deduction?
- Home condition: Are you choosing newer, lower‑maintenance homes or planning projects that add cost and time?
- Resale lens: Is the layout, location, and outdoor space likely to appeal broadly if you sell in five years?
Make it easy with local guidance
If you want a ready‑to‑use spreadsheet prefilled with Cary‑plausible scenarios, we can set it up for you, walk through assumptions, and layer in neighborhood‑level details like HOA norms and typical time to sell. Our team handles the data gathering, so you can focus on what fits your life and timeline.
Ready to compare your options and tour the right neighborhoods? Start Your Stress‑Less Move with Jami Amidon.
FAQs
How long should I plan to stay in Cary to make buying worth it?
- Many analyses point to 5 to 7 or more years to overcome transaction costs, but the answer depends on appreciation, rate, and fees, so run the five‑year model with Cary inputs.
Do first‑time buyers in Cary get tax benefits on day one?
- Mortgage interest may be deductible only if you itemize, and property tax deductions are subject to SALT limits; see the IRS in Publication 530 for details.
How do HOA fees in Cary affect my break‑even?
- Add HOA dues to owner costs each year; higher fees can push the break‑even out unless appreciation and rent growth offset the added expense.
What if I need to relocate from Cary sooner than expected?
- A shorter hold increases the impact of selling costs and market timing risk; consider renting first or buying with a plan to hold longer if you might need to move.
How should I treat my down payment if I choose to rent in Cary?
- Assume you invest the funds at a reasonable after‑tax return and subtract that investment value from your five‑year rent total to get a fair comparison.
