Is buying or renting a $300,000 townhouse in Maryland financially comparable? Let me break down the numbers.

Monthly Ownership Costs

  • Maintenance: $4,000/year (1.5% of home value)
  • Property taxes: $3,300/year
  • Insurance and utilities: $1,150/year
  • Mortgage: $14,580/year (with 20% down at 4.5%)

This comes to approximately $1,920/month before tax deductions.

After accounting for tax deductions on interest and property taxes, the monthly cost reduces to roughly $1,580. When factoring in closing costs and selling expenses over a 7-year holding period, the total monthly cost reaches approximately $2,000—comparable to rental prices in the same area.

Challenging Common Assumptions

Home appreciation shouldn’t exceed inflation long-term, and equity accumulation must account for opportunity costs of the initial down payment. Risks of ownership include:

  • Foreclosure liability in recourse states
  • Market downturns
  • Rising property taxes as municipalities address budget pressures

Conclusion

The question of owning vs renting depends on your assumptions regarding investment returns, inflation, and personal risk tolerance rather than being an obvious financial advantage.