If you’re in the wealth accumulation phase of your life, I think buying a home is a terrible decision (in most cases). Prove me wrong. Seriously. I’m not being rhetorical. I want to see if there’s math that says otherwise.
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100K in shares, etc. at 4% annually for 10 yrs = *$148K* vs 100K (20%) downpayment on 500K house whose value increases at 4% annually for 10 years = *$522K* ($740K house value after 10 yrs - $210K mortgage P&I - $8K insurance, tax, maintenance)
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You're right. Forgot to include payment of remaining mortgage balance at time of sale (after 10 years, say).
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CORRECTED: 100K in shares at 4% annually for 10 yrs = *$148K* 100K (20%) downpayment on 500K house whose value increases at 4% annually for 10 years = *$225K* ($740K house value after 10 yrs - $210K mortgage P&I – $297K mortgage balance - $8K insurance, tax, maintenance)
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this math doesn’t include broker costs in buying/selling a house and lots of other factors. in majority of cases is better to rent primary residence from my calculations
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Stock market growth needs to outperform housing market growth by > ~2x to be better.
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Magic of leverage. Just don’t forget, housing has very nonzero carrying costs.
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Yes what about the accumulated interest until the house is paid off.
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Correct version below (for non-US case).
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