Originally Posted by mtb123

I understand the point you are trying to make and I agree that under the certain circumstances renting a particular property can cost significantly more than owning said property. However, I feel that you are overlooking a few important considerations. Purchasing a home entails a risk/reward tradeoff. You are purchasing an asset and financing that purchase with long term debt. There is a probability that over time home ownership will be cheaper than renting. There is also a probability or risk that home ownership will be more costly than renting. There are no guarantees of any particular outcome.

That break-even study is helpful for those are able to stay in one place. Unfortunately, many people are forced to move by circumstances that are beyond control. Let's say I commit to living in Vegas for 2 years and then after 2 years I have to move because of my job. Well, for the two years I lived in Vegas owning was cheaper in than renting. Then I put my house on the market. There is a risk it will be on the market for a few months. What if it takes 6 months? Well, I find a new place to live in my new city, but I still have to keep paying the mortgage on the Vegas property for 6 months, there is no way I break even. That article sounds great, but their break-even analysis is irrelevant for those who do not have the opportunity to stay in the same home for X number of years. It doesn't properly account for the risk associated with home ownership.

My father had the same job for 30+ years. In the current economy this is becoming less and less likely. Purchasing a home involves significant transaction costs. For a typical homebuyer that includes $3k+ in closing cost and 6-7% to the realtor at the time of sale. The longer you own the home, the less significant those costs become. But, what if you have to move every 5 years because of the job market? In the first 5 years your mortgage payment is mostly interest. To use your words, you are "providing a living" for a banker during those first five years and not building up much equity. In a slow real estate market you may lose money on a home if you only stay five years. If you have to move every 5 years for 30 years you will be "providing a living" for a banker for 30 years.

My point is that it is hard predict if you will be able to stay in a home long enough to pay it off. When you take on a 30 year mortgage you take on a lot of risk.

You may lose your job.
You may lose your health.
You may get married.
You may get divorced.
Your living preferences may change.
Your neighborhood may deteriorate.

Homeowners also bear more risk of surprise expenditures compared to renters. AC goes out. Roof needs to be replaced. House needs to be painted. These are significant cash outlays that renters don't have to worry about.