I would argue that the real value in owning your home isn’t in the numbers or those intangibles. In fact, buying a home may actually be a dumb financial decision.
That return of just over 5% is well below the annualized 9.9% return on stocks in the S&P 500 over the last 30 years. It’s even below the 6.3% annualized return on the U.S. Aggregate Bond Index over the period.
If you can invest your down-payment and the extra money each month for 10% in stocks, then there’s no reason on earth you would take the lower return of home ownership.
Another reality confronts the buy versus rent decision, the argument that a renter should be able to take the money they save each month by paying rent rather than making a higher mortgage payment and invest it.
The decision to buy a home vs renting is a personal one and you’ll have to weigh your own pros and cons. Go beyond just looking at the numbers though and think about the intangible benefits and how home ownership fits with your financial style.