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I thought someone did the math where the sudden jump in home prices plus high interest rates have netted an outcome where the interest payments you spend servicing the loan are higher than total rent payments.
Meaning, the conventional wisdom of “you light your money on fire paying rent versus you pay yourself via equity in buying a home” no longer holds true. Instead, renting is burning money at a slower rate than buying a home, and you can instead rent at a lower cost and invest the delta in the market to earn a higher return on your investment and have greater wealth creation renting versus owning a home.
You also have to factor that if I put 150k down on a home, that’s no longer earning high returns in the market. It’s locked up in the home, so that equity you build comes at the cost of losing a massive income generating asset.
The market is weird and will stay weird. Watch out for the self proclaimed real estate pundits who will tell you renting is cheaper now just because rates are high. Ask if they own or if they are just saying renting is better because they don’t…actual homeowners will tell you otherwise. Rents just haven’t caught up but they will one day, then your bias will shift. There are still major benefits to owning even at high rates, and housing costs aren’t going down over time, just up, so buying a home now may not mean the lowest costs short term, but it is a sacrifice to make to reduce your costs while keeping your quality of living for the rest of your life. And if you put money towards a downpayment, appreciation allows you to leverage that initial investment more than any market would.
Would you rent for $2500 and earn 5-10% on 140k or pay $4100 per month to have a home, also don’t forget taxes and insurance and maintenance so more like 5-6k/month. Homeownership isn’t an investment it’s consumption. Understand the costs associated of your consumption and make the correct choice.