Just like you

Ben

, I love heuristics. However, they’re best used by someone who has a much deeper understanding of all other factors. In this case, the 5% rule ignores several important factors.

• As you mention, the control you have when owning a home (advantage buying)
• The flexibility of renting a home (advantage renting)
• The higher predictability of a fixed mortgage vs. rent that could be increased each year (major advantage buying)
• The tax benefit of a mortgage interest deduction (advantage buying)
• The drop in value of the dollars you owe, due to inflation (huge advantage buying)

Just as I argued here that prepaying principal on your mortgage is almost always a terrible idea, financially speaking, buying almost always comes out ahead of renting if you’re planning to stay in the same region for many years.