[enragedcacti]

My understanding is that it shakes out to a couple of things:

1) while not beating the S&P, historical returns on real estate are pretty good and less volatile

2) There are a number of significant tax advantages to home ownership

3) you can't live inside a stock. Building equity instead of paying rent is a good thing

4) you can rent it out, making it pay for itself while accruing value as long as you are willing to add your own labor

It's hard to put that all into a chart since (2) and (3), and (4) are personalized and partially mutually exclusive and the tax landscape is always changing.

[kelnos]

> Building equity instead of paying rent is a good thing

That depends heavily on your goals. I hear this a lot, but it always reads to me like people think equity just magically happens when you buy a home (with a mortgage). No, you have to put money into it monthly, and a portion of that goes to pay of principal, which builds equity.

Whether or not putting that money into a large, fixed, illiquid asset (versus stocks/bonds) is a good idea... well, it depends. Personally, if I could get an interest-only mortgage with a reasonable interest rate (for my primary home), I would probably go for it. I personally don't care all that much about building equity, and I'd rather free up that cash for other investments.

Of course, many people would use the option of an interest-only mortgage in order to buy even more house than they can afford, instead of for the purposes of freeing up cash, and then end up in dire financial straits, as we saw in the 00s.

Also, re: paying rent vs. building equity: yes, I do have a larger space than when I was renting, but I am also paying more than my last rent, in property tax + mortgage interest + HOA dues. That's money that's just as equivalently "thrown away" as if I was just renting. I don't regret this decision, but let's not pretend that renting is throwing away money, and owning is perfect use of money.

[ClumsyPilot]

Mortgage is the only type of leverage that an average Joe can get cheaply. Any attempt at getting a 'normal' loan will be met with insane interest rate.

That's the main reason why housing market is what it is.

[mrep]

What? You can get get cheapish credit for just about any asset as long is it secured by something whether that be a house, car, boat, rv... What do you consider a 'normal' loan? Unsecured ones?

[frumper]

> That depends heavily on your goals. I hear this a lot, but it always reads to me like people think equity just magically happens when you buy a home (with a mortgage). No, you have to put money into it monthly, and a portion of that goes to pay of principal, which builds equity.

I feel like you're missing that you have to put money into a place to live monthly anyway and in the past decade the equity is built up through home value appreciation. My area has been seeing 7-10% increases for quite some time. That equity increase far outstrips what principle I'm paying off.