"Renting Is 100% Interest" — What the Data Actually Says

I saw this post and it caused me some pause. You've probably seen some version of it before: "Renting is 100% interest."

The implication is clean: rent is money thrown away, a mortgage builds equity, therefore buying always wins. It's a great soundbite. It's also misleading enough to cost someone real money if they take it at face value.

I believe in real estate for the long term...for the right person, at the right time. So let's run the numbers using real data from our market.

Year One on a Median Colorado Springs Home

The median home in the Pikes Peak region right now is $445,000. Current 30-year fixed rates are around 6.1%. Here's where every dollar goes in Year 1:

Read that last line again. Homeownership is 87.2% non-equity in Year 1. Not just mortgage interest — when you account for taxes, insurance, and keeping the roof from leaking, only about 13 cents of every dollar you spend actually becomes yours.

Renting at "100% non-equity" doesn't sound quite so reckless when buying is running at 87%.

The Ownership Premium

Estimated rent on a $445K home in Colorado Springs runs around $2,670/month. Total monthly ownership cost (mortgage + tax + insurance + maintenance) is about $3,484.

That's an $814/month premium to own. And of that premium, only $447/month goes to principal in Year 1. You're paying $814 extra to capture $447 in equity — a 55-cent return on every extra dollar.

None of this is theoretical. These are the actual costs on the actual median home in our actual market.

Five Years In

The ownership math improves over time, but slowly:

• Total payments over 5 years (P&I only): $161,801
• Of that, interest: $131,401 (81.2%)
• Of that, principal: $30,400 (18.8%)
• Add taxes, insurance, maintenance for 5 years: another $47,250
• Total 5-year cost: $209,051
• Total equity built: $30,400 — 6.8% of the home's value

After five years and $209K out of pocket, you own less than 7% of your home. The other 85.5% went to interest, taxes, insurance, and upkeep.

The Hidden Killer: Transaction Costs

This is the part almost nobody talks about.

Buying a home costs roughly 3% in closing costs. Selling costs roughly 8% (compensation, title, transfer taxes, prep). On a $445K home, that's $48,950 round-trip — 11% of the home's value.

Your home has to appreciate 11% before you break even on the transaction alone. At Colorado Springs' 3-year appreciation rate, that timeline is… well, let's talk about appreciation.

What Appreciation Actually Looks Like Here

This is where the real estate story gets nuanced:

• Last 3 years: 0.0% annual appreciation. Flat.
• Last 5 years: 2.2% annual. Modest.
• Last 10 years: 6.8% annual. Excellent — but this includes the 2016–2022 rocket.

If you bought at the 2022 peak, you're still underwater on transaction costs three years later. If you bought in 2016, you've nearly doubled your money. Timing matters enormously, even in a market with strong long-term fundamentals.

The Comparison Nobody Makes

Here's the question that breaks the "renting is throwing money away" narrative:

What if the renter invests the difference?

A renter saves $814/month compared to an owner. If they invest that at a historically average 7% annual return:

At today's prices, today's rates, and the last five years of appreciation — the disciplined renter who invests the difference comes out $27,000 ahead over five years.

Now — does every renter invest the difference? No. Most don't. Homeownership is a forced savings vehicle, and that has real psychological value. But the math is the math.

So When Does Buying Win?

This is the part I actually care about, because I firmly believe in real estate for the long term, for the right person, at the right time.

Buying wins when:

• You're staying 7+ years. That's roughly the breakeven point where equity accumulation, potential appreciation, and amortization overcome transaction friction. The 10-year story in Colorado Springs (6.8% annual appreciation) is genuinely compelling.
• You're not stretching to the edge of qualification. If buying puts you at 40%+ of your income, one surprise expense turns "building equity" into "drowning in debt." Rent gives you margin.
• Rates drop and you can refinance. If you buy at 6.1% and refinance to 4.5% in a few years, the math shifts dramatically. More of each payment goes to principal. The ownership premium shrinks.
• You value stability, control, and rootedness. There's real value in painting your walls, planting a garden, knowing your kids won't change schools because a landlord sold the house. That value doesn't show up in a spreadsheet, and it shouldn't have to.

What the Honest Version Sounds Like

"Renting is 100% non-equity. Buying is 87% non-equity in Year 1, improving over time. Buying gives you a leveraged bet on appreciation that historically pays off over 7+ years in this market — but requires you to stay put, absorb transaction costs, and weather flat stretches like the one we're in now."

Not as catchy for Instagram. But it's the truth, and you deserve the truth before you sign a 30-year contract.

If you're ready to have a direct conversation about whether now is the right time for you — let's look at the numbers together.

All figures based on current Pikes Peak MLS data and El Paso County market conditions as of March 2026. Median home price $445,000, 30-year fixed rate 6.1%, 0% down, $2,000 annual property tax, $3,000 annual insurance. Rent estimate uses 0.6% price-to-rent ratio. Appreciation rates calculated from MLS historical data. Your situation may differ — and that's exactly the point.