The rent-versus-buy break-even is the point at which owning a home becomes cheaper than renting a comparable one. Buying has large one-time costs: closing costs of 2% to 5% going in and roughly 6% to 8% in agent fees and other costs coming out. Owning also has ongoing costs renters do not pay: property tax, insurance, maintenance (often estimated at 1% of the home's value per year), and the return the down payment would have earned if invested. Against that, owning builds equity and locks in the housing cost while rents rise.
Spread the one-time costs over the years you stay, and there is a crossover. In many US markets it lands between three and seven years. Stay shorter and renting usually wins; stay longer and buying usually wins. Expensive coastal cities with high price-to-rent ratios push the break-even out to eight years or more; cheaper markets pull it in.
A rough example: a $500,000 home versus $2,800 monthly rent. With 20% down, a 6.5% mortgage, 1.2% property tax, and 3% annual appreciation, the break-even is around five years. Drop appreciation to 1% and it stretches past eight.
The common mistake is comparing only the mortgage payment to rent. Principal is savings, but interest, tax, insurance, and maintenance are not, and together they often exceed rent in the early years. A second mistake is assuming you will stay ten years when the average first home is sold in six to eight.