Six Horizon Point Mistakes

The errors that make buying look cheaper than it is — and the one that makes renting look cheaper than it is.

Rent-vs-buy math tilts toward whichever side you already favor. These six errors are how.

Home purchase math is emotional. People want to buy, so they tune inputs until the calculator agrees. The six errors below systematically push Horizon Point earlier than reality.

Quick answer

Rent-vs-buy math tilts toward whichever side you already favor. These six errors are how.

What you are trying to do

The errors that make buying look cheaper than it is — and the one that makes renting look cheaper than it is.

Best next step

Rent vs Buy Calculator

Limit to remember

Treat this as a practical aid for the task, not a replacement for professional judgment.

Key points

▸ Ignoring maintenance. 1-2% of home price per year for maintenance is realistic. Skipping this makes ownership look 30-50% cheaper than reality.
▸ Overestimating appreciation. Recent-market extrapolation is the biggest error. 3% real long-run is defensible; 6-8% is not.
▸ Skipping transaction costs on exit. Selling costs 6-8% of price (agent fees, closing, staging). If Horizon Point doesn't subtract this, break-even is too early.
▸ Treating mortgage payment as forced saving. Only principal is saving — interest is cost. Especially early in a mortgage, most of the payment is interest, not equity.
▸ Ignoring opportunity cost of the down payment. $90k down at 7% over 7 years compounds to $145k. Subtract that from ownership-side savings.
▸ Skipping property tax creep. Taxes rise 2-4%/yr as assessments adjust. Model it or the ownership cost line understates 20-year reality.
▸ Using bubble-era rent growth as baseline. If your current rent is at market peak and you extrapolate 5-7%/yr, you'll bring break-even way too early.

Examples

The maintenance-skip error

$500k home, 1% maintenance = $5k/yr. Skipping this over 10 years = $50k understated. Horizon Point looks 2-3 years earlier than reality.
The appreciation-overreach

Used 7% appreciation (recent market). Actual realized: 2.5%. Break-even arrives years later than the calculator showed. House sold at loss after 4-year tenure.
The transaction-cost miss

Sold at year 6 when calculator showed break-even at year 5. But 7% selling cost = $35k on $500k home. Net equity lower than model. Real break-even was year 8.

When to use which tool

Frequently asked questions

› What if I'm buying in cash?

The opportunity cost of the full purchase price is the main factor. No mortgage interest, but no forced-saving either. Run Horizon Point with zero rate and 100% down, then add S&P 500 opportunity cost on the total.

› How do HOA fees fit in? How-to

Add to the maintenance/ownership cost line. HOA fees grow 3-5%/yr and can flip break-even significantly. A $400/mo HOA is $48k over 10 years.

› How should I use a decision framework in real life? How-to

Use a decision framework to expose the tradeoff, not to outsource the decision. Write down the inputs, compare the output with your constraints, then ask what would change the answer. The strongest use is scenario testing: base case, conservative case, and failure case.

› Is this financial, legal, or tax advice? Trust & accuracy

No, this is not legal, financial, tax, medical, or professional advice unless the page explicitly says that use case is supported. It organizes assumptions so you can inspect them. Verify high-stakes choices with qualified people who can review facts, contracts, regulations, and downside risk.

› What assumption matters most in a decision model? Edge case

The most important assumption is usually the one you are least certain about and most emotionally attached to. Change that input first. If the recommendation flips after a small change, the decision is fragile and needs more evidence before you treat the model as useful.