Owning a house versus renting: the math seems unbelievable, makes me skeptical

If you can pay off the house in many places the lingering cost of property tax and insurance will be less than paying rent to someone else and the ROI on your equity will amount to about 8.5 percent annually. Modestly good investment.

Yes, this is part of what drives urban displacement. When it happens to white people, everyone is like boo-hoo I can't afford to live in my neighborhood. Sell the house and move if you can't afford the property taxes.

Youranalysissucks wrote:

Your analysis is probably horrificly flawed.

Renting makes more sense than owning in a lot of cases, ESPECIALLY in high cost of living areas like SF/Seattle

Everyone told me the same thing a couple years back- that it’s a bubble, prices are nuts etc. I jumped in a bought (550k all cash transaction) Then I earned 100k equity in 1 year and it continues to climb, albeit at slower rate

If you plan to stay put for 3-5 years, usually you’re better off owning. Sure-If you’re a short term mobile type, keep renting.

The analysis between renting and buying assumes you’re instead earning S&P stock market returns renting with the money you’d otherwise use for a downpayment buying . The hilarious thing is many renters aren’t investing jack anyway (maybe if you’re Jamin a few peanuts instead of buying Netflix) so not only are they not tapping into real estate for wealth building but they aren’t getting equity returns either. Thus their net worth stays low while the rest of us build and build over time in both stocks and real estate.

The analysis between renting and buying assumes you’re instead earning S&P stock market returns renting with the money you’d otherwise use for a downpayment buying . The hilarious thing is many renters aren’t investing jack anyway (maybe if you’re Jamin a few peanuts instead of buying Netflix) so not only are they not tapping into real estate for wealth building but they aren’t getting equity returns either. Thus their net worth stays low while the rest of us build and build over time in both stocks and real estate.[/quote]

I think this is the smartest post on the thread. There's a real-world difference between financial projections and human behavior. I first noticed it on this forum. A few people will talk proudly about their frugal lifestyles and how they paid off their mortgage and live debt-free. Great, but the unstated trade-off is you're not spending money on conventionally pleasing things like vacations or gourmet coffee. That's fine, but what exactly are you saving for? Just to be super ultra debt-free? It seems unlikely that that camp is saving until they are 60 and then they finally buy the expensive car, etc. Maybe it's to not go broke in retirement or to retire early, but isn't retiring early just a different way of spending the money? Yes. Some people buy Teslas, save and retire early. The Tesla guy gets satisfaction from his car, the retiree gets satisfaction from not working. And both think they are smarter than the other!