[DanielHB]

This isn't really true in many HCOL areas, a mortgage payment + amortization can be cheaper than renting an equivalent property. On top of that the amortization of your loan doesn't incur capital gains tax.

Even if your property doesn't appreciate more than inflation you can still profit massively from owning just through the loan amortization. Only being forced to sell during a market crash could realistically cause a big downside, but the upside is substantial compared to the risk.

It is also the safest leverage investment most people can do and the cheapest way to diversify away from stock market.

In fact paying off your mortgage is usually better risk/profit calculation than buying bonds as mortgage interest is usually higher than bond interests[1]. If you hold any significant amount on bonds you are better off using that money for a downpayment.

Everyone here is doing the cold hard math on 100% stocks when every financial advisor says you should diversify to reduce risks. Of course if you go 100% stocks and assume average returns will keep going forever (and not, you know, go full 90s Japan) the math will say stocks. But if you add any sort of risk lowering diversification a mortgage is usually the best one you can get.

[1]: I live in Sweden where almost everyone has floating interest rates for mortgages, I know US people can lock in their interest at low or high rates for decades which can skew the calculations

[thfuran]

In the US, there's a pretty significant capital gains tax exclusion on the sale of primary residence too.

[DanielHB]

In Sweden 30% of interest payments on mortgages is tax deductible.

When I sold my old flat and even though it only appreciated like 10% over 4 years (about the same as inflation) I still got a lot of money when I got the loan settled. 4 years of amortization at 2% per year is 8% of the original value of the apartment, tax free. And my mortgage+HOA fee was actually lower than my rent was before even before the interest tax deduction.

So after sales fees (also tax deductible), moving costs, capital gains, etc I think I saved around 15% after-tax of the total value of the apartment compared to renting over a span of 4 years. Given my downpayment was 15% I roughly doubled my downpayment money in 4 years.

That is a return of ~22.5% compounding per year _after tax_, which is much better than the average stock market returns. Of course I got there is some luck involved (my apartment didn't go down in value, I didn't need to do any renovations, etc), but I could potentially have profited even more if it had appreciated more. And that is on top of the real estate risk diversification benefits compared to stocks.

[thfuran]

In the US, 100% of mortgage interest (for the first 750k of loan) and property tax (up to 40k combined w/ other state/local taxes) is deductible. Property ownership gets such favorable tax treatment that it’s kind of ridiculous.