This is interesting. I do get that if you have initial money to buy a house outright, there are better mostly safe things you can invest in, to get a higher return on investment than a house. If I got a 30 year mortgage in 1994 and paid $1M over that time to pay it off on say, a 5% fixed rate with no PMI or downpayment required, the purchase price was probably closer to $500K assuming 2.5% average annual inflation. And average housing inflation since then was more like 2.8%, so factoring in maintenance and taxes and insurance, guessing no real appreciation over that time. But the quality of life difference to an apartment of the same cost would I think in most cases more than make up for it.
I think where I’m stuck is, we’re starting from the idea of having $1M in hand to start out with to buy a house outright or rent + invest, where a much more common situation is either: I have not got anything saved up, so I can neither invest nor get a mortgage without an initial downpayment; or else, I have enough saved up for a downpayment or PMI and hopefully a secure enough income to pay the mortgage every month.
In my case, mortgage + escrow + maintenance costs are still less than half what I was paying for my cheapest studio apt nearly a decade later, and a much better quality of life because of the extra savings. My neighbors are renting a nearly identical house, and it’s criminal how much they have to pay to stay there. I wouldn’t be able to afford rent here.
This is interesting. I do get that if you have initial money to buy a house outright, there are better mostly safe things you can invest in, to get a higher return on investment than a house. If I got a 30 year mortgage in 1994 and paid $1M over that time to pay it off on say, a 5% fixed rate with no PMI or downpayment required, the purchase price was probably closer to $500K assuming 2.5% average annual inflation. And average housing inflation since then was more like 2.8%, so factoring in maintenance and taxes and insurance, guessing no real appreciation over that time. But the quality of life difference to an apartment of the same cost would I think in most cases more than make up for it.
I think where I’m stuck is, we’re starting from the idea of having $1M in hand to start out with to buy a house outright or rent + invest, where a much more common situation is either: I have not got anything saved up, so I can neither invest nor get a mortgage without an initial downpayment; or else, I have enough saved up for a downpayment or PMI and hopefully a secure enough income to pay the mortgage every month.
In my case, mortgage + escrow + maintenance costs are still less than half what I was paying for my cheapest studio apt nearly a decade later, and a much better quality of life because of the extra savings. My neighbors are renting a nearly identical house, and it’s criminal how much they have to pay to stay there. I wouldn’t be able to afford rent here.