I find that it’s difficult to change anyone’s mind on this subject, but the issues I often see are:
1. Overestimating the predictability of the costs of owning a home. As a renter, I know exactly what I will pay for the next year. A homeowner doesn’t have that same knowledge.
2. Comparing rent to mortgage for equivalent properties. Yes, renting the same property will generally compare unfavorably to purchasing it. But compare a 2-bedroom apartment to a 4-bedroom home and the apartment becomes much more competitive financially. However then it comes down to personal preference for the place you want to live, not a rational cost analysis.
3. Underestimating the stress of owning a home and overestimating the stress of renting - but this is also mostly a personal and perspective thing.
The calculus is naturally going to differ depending on the individual, but for points 1 and 3, if you can find newer construction within budget that's more likely to have been built to code and not in need of critical maintenance, things will likely work out in favor of homeownership.
Having previously been renting in the SF Bay Area, ownership worked out much better in my case. With the rate that rent had been increasing there it'd take several bad unexpected house repairs each year to equal the increases.
Factoring in planned improvements might make money spent over time more of a wash, but the big difference there is that I can save and plan for improvements… point in case I have planned major bathroom renovations that I've been sticking money into a high yield savings account for. If push comes to shove, don't actually need to do the renovations though, and that money can go towards other more important things helping mitigate or prevent financial disaster. On most peoples' salaries that's difficult to do when renting unless you're renting something so small that it's difficult to use as anything but a place to sleep.
> On most peoples' salaries that's difficult to do when renting unless you're renting something so small that it's difficult to use as anything but a place to sleep.
This is kind of getting at my point and prediction. Cars were once seen as Freedom Machines that people were dying to operate when they turned 16.
I believe in future generations will see housing as more than a place to sleep but won’t continue to drool over a 3 or 4 bedroom single family home. People are having fewer kids and the climate is going to make maintaining a yard a bigger hassle and cost in many areas.
1. Overestimating the predictability of the costs of owning a home. As a renter, I know exactly what I will pay for the next year. A homeowner doesn’t have that same knowledge.
2. Comparing rent to mortgage for equivalent properties. Yes, renting the same property will generally compare unfavorably to purchasing it. But compare a 2-bedroom apartment to a 4-bedroom home and the apartment becomes much more competitive financially. However then it comes down to personal preference for the place you want to live, not a rational cost analysis.
3. Underestimating the stress of owning a home and overestimating the stress of renting - but this is also mostly a personal and perspective thing.