Yesterday’s prose was very simplistic and did not take into account many of the variables involved in the home buying process. Some of them play a big part in the equation and account for large swings in dollar amounts.
Below is the math which should include all of the variables involved. My thinking may not be perfect so please comment and let me know what thoughts you have.
I think in the end it is very clear which investment is the better one financially. But many people like to own their own home. Can’t do that if you rent your whole life. And many people would not save the difference between rent and buying so in a way it is a forced savings plan. And if buying a home can force people to save nearly $1M dollars, then they are likely much better off than if they rented (b/c they wouldn’t have saved that $1M). If you are disciplined and can save, I think you can do better with your money than the forced saving plan of buying a home. Continue Reading
