4 ms·

I’m not comparing it to the cost of renting, I’m simply saying that when I sell my home for $200,000 having bought it in the 1970s, at best it will be nearly br

I’m not comparing it to the cost of renting, I’m simply saying that when I sell my home for $200,000 having bought it in the 1970s, at best it will be nearly break even.

dlp211 8y ago
No, because you are not calculating imputed rent into your equation.
- prewett 8y ago
  But you also have to calculate the opportunity cost of having a bunch of money sunk in an asset that (apparently) didn't perform spectacularly. By renting he could have invested that $200k in an S&P 500 index fund. Assuming he bought his house today in 1978, the S&P 500 increased over 27x ($97 on 4/23/1978, and $2670 today), plus he would have got about 2% dividends. I'm guessing his house didn't cost $7400 in 1978 (not to mention the 1 - 2% "dividend" he paid the government in property taxes), so I'd say renting isn't obviously worse. Depends on the rent.
  - dlp211 8y ago
    Renting doesn't magically mean you have additional money to invest. The only opportunity cost to factor is the value of the down payment. But you also need to consider their cash flow as rents rose and their mortgage payment remained mostly the same or dropped as they refinanced plus now that they own their home outright.
    - mancerayder 8y ago
      And various deductions including interest.