Post by @yunggeeski

Is renting better than buying a house if you invest the difference? We modeled what happens if two Americans start at age 22 in 1983 and follow different housing strategies until retirement at age 65 in October 2026. One rents a comparable house for life and invests. The other buys a home at age 29, pays off a 30-year mortgage, and also invests. Results at age 65: Rent + Invest: $3.53 million Buy + Invest: $1.99 million The renter finishes approximately $1.54 million ahead. Key assumptions: Both individuals are single, have no children, start with $0, and earn the same historical average U.S. hourly wages, assuming full-time employment. Both pay modeled taxes, food, transportation, healthcare, utilities, and other living expenses. Both invest their available remaining income in the S&P 500 with dividends reinvested. The renter pays estimated market rent for a comparable house, with rent increasing over time. The rental baseline uses the 1990 median gross rent plus an assumed 35% detached-house premium. The homeowner buys a median-priced existing home in October 1990 for approximately $96,400, with 10% down, 3% closing costs, and a 30-year fixed mortgage around 10.2%. Homeownership expenses include property taxes, insurance, maintenance, and mortgage insurance where applicable. No refinancing is assumed. The homeowner builds equity as the mortgage is repaid and the property’s value changes with the FHFA national house-price index. After the mortgage is paid off, the homeowner invests more. Both net-worth figures include all modeled financial assets. The homeowner’s figure includes home equity minus remaining mortgage debt. The simulation uses simplified historical expense and tax assumptions. Values are nominal, and some final 2026 observations are estimated or partial. This is a modeled scenario, not a universal verdict on renting versus buying. Different mortgage rates, home prices, rent levels, locations, incomes, investment returns, or household circumstances could produce very different results. Homeownership also provides housing security and lifestyle benefits that aren’t fully captured by net worth. The central question is whether the wealth-building benefits of homeownership outweigh the opportunity cost of the money committed to owning a home. #RentVsBuy #HousingMarket #PersonalFinance #Investing #RetirementPlanning