Quote:
Originally Posted by Johnny199r
Aren't there still property taxes, maintenance costs, insurance costs when you own a home? Do those diasappear when the mortgage is paid off?
I like the freedom renting brings. It doesn't cost me anything to move beyond renting a uhaul and buying some pizza. I know that buying/selling a home will cost a lot more than that just to the realtor. Lots of people own more than one home in their life, think how much money they paid to a realtor for the privilege.
The houses in the area I live in are around 600k-1.2 million. I get to live in this nice area with amenities like shopping and bike paths area without having to shell out serious money to do so. That's a huge win in my books.
Most of all, if someone invests wisely, the opportunity costs of having money tried up in a mortgage vs being in the markets is a huge hit. I have about 800k in the market rather than buying a house. I haven't seen any properties that have matched the historic annual returns of the S&P 500 of 10% over the last century. My decision to rent has me way ahead of where is be if I bought a house. I'll take early retirement and living on the beach somewhere at 55 while my investments continue to grow, but that's just me.
Does anyone here know anyone who bought a home in Calgary 25 years ago for $150,000 that's now worth $1.6 million, without renovations they would have paid for? That's a 10% annual return.
Again , if people have kids and want a big yard and lots of room, I get it. You want to make sure little johnny or Sally will never have to switch schools? Sure, Buying makes senses. But the financial argument of doing better by owning a house is nonsense.
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You're forgetting leverage with mortgages. The average person isn't going to play with margins and options. However, the average person is getting 5-1 leverage on their down payment on a home. This means that you only need 2% annual increase in home prices on 5-1 leverage to be equivalent to 10% on your money.
Works the opposite way too, but historically (aside from Calgary in the last 10 years, and niche markets like Japan), housing increasing with inflation has been pretty safe.
But I digress. If you have 800k liquid, you can do whatever you want, including buying houses or buying nothing or anything in between and you'll do alright.