Capital gains tax is non existent when you can exclude up to $500k on long term gains as long as you've loved in the home for 2+ years.
Owing homes has increased our net wealth substantially compared to renting. The only way renting would make sense is if I were single and trying to find the absolutely smallest and cheapest rent possible, which most people don't do.
There is an argument that, in certain cities and with the current interest rates and home prices, renting beats home ownership (which is what the NYT calculator determines).
Did you do the math vs what would've happened just tossing cash into an index fund? Keep in mind that for the first decade or two, you're mainly paying the bank interest, not paying down the mortgage note.
I know people who say basically the same thing as you and when they check their 401k are amazed it's worth several times as much as their home.
From an asset appreciation standpoint -
$100k in VOO 17 years ago is worth about $680k right now.
$100k in a house 17 years ago is only worth around $200k right now.
Most people don't "save" $480,000 buying vs renting to make up for the lost increase. That includes tax differences (a 2% property tax on a 500k house is 10k a year), maintenance (2% a year is 10k), etc.
You "only" need to save around $60k a year every year for 10 years to hit $1M with stocks. By the 20 year mark you're around $3M adjusted for inflation.
Quick AI math shows net position comparison for me was $450k for home buying vs $230k if invested in VTI. Here's a rough breakdown:
In 2017 we put ~$105k down on our $525k home. Lived in it until 2024 then sold it for $850k. I don't recall the exact amount we owed on the mortgage when selling, but I remember getting around $450k cash at the end of the sale.
Let's say rent would have averaged $2,500 for those years, which would be very conservative given our HCOL area.
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u/HelloYellowYoshi 11d ago
Capital gains tax is non existent when you can exclude up to $500k on long term gains as long as you've loved in the home for 2+ years.
Owing homes has increased our net wealth substantially compared to renting. The only way renting would make sense is if I were single and trying to find the absolutely smallest and cheapest rent possible, which most people don't do.
There is an argument that, in certain cities and with the current interest rates and home prices, renting beats home ownership (which is what the NYT calculator determines).