Quote:
Originally Posted by Cowboy89
Only in the case where renting vs. buying is exactly the same on a cash-flow basis. Often this is not the case and renting ends up being cheaper than even the interest proportion of a mortgage payment (In others words the difference between renting and buying is just who you pay interest to, the bank or a landlord). Another bonus of renting is that you don't have to pay for maintainence and repairs, many homeowners really underestimate this cost. Also factor in the fact that the principal portion you pay is dead money (home equity doesn't pay you interest or dividends unless you have tenants and that comes with its own perils) earning nothing in interest or dividends. This makes a compelling case to rent and invest the difference in a broad variety of investments that earn a return. That way you get diversification, liquidity, and flexibility. All things your house can't do for you as an asset.
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There's been a lot of research done on this and generally renting is better long term if you invest the extra money left over from not buying a home. With that said, very few people have the discipline to take that extra money, invest it and leave it. Chances are it's going to be blown on things like a fancy new car or something.
The advantage of buying a home is that it forces people to save and then when they are ready to retire they can downsize and pull that money out of their home and use it for retirement.