[joelhaus]

This is an interesting "investment" example. In addition to the listed trade-offs, the mortgage would've likely allowed 25% cash down in 1976, approximately $18,000. Furthermore, savings in rent would've largely gone toward mortgage interest, repairs and capital expenditures. Given these assumptions, the result over a 40 year period would be an annual return of 10.12%[0].

Even so, the approximate return from the S&P 500 (reinvesting dividends) over the same period would be 11.468%[1].

[0] http://www.moneychimp.com/features/portfolio_performance_cal...

[1] http://dqydj.net/sp-500-return-calculator/

[mathattack]

One thing to add... It's only in rare parts of the US that real estate appreciated so much, but you would have gotten those equity returns anywhere in the country.