I got tired of renting, and I looked it up, I realized I'm paying the equivalent of a $300k property for a standard 30-year mortgage in rent. And a $300k house is much nicer than my apartment.
I saw a $50k condo down the road from me. It looks not quite as good as my current apartment. Getting a mortgage for something like that is much better than renting, right?
I very recently made the jump to home ownership (like literally yesterday lol) because I was ready to put down roots.
As an investment, home appreciation is a very poor way to make money and I don’t think it’s all that much better than renting. The only reason why home ownership is a decent investment at all is because the tax code has shit like the mortgage interest deduction which is a big tax write off for people with mortgages and the SALT deduction which is a big tax write off for people with high property taxes.
Furthermore, note that for most of your mortgage, the costs of mortgage interest, home maintenance/condo fees, property taxes, and homeowners insurance are going to be WAY more than the principal. All of these costs - except the principal - are functionally the same as paying rent.
On average, 75% of a homeowners monthly housing costs will go to things other than the principal (and that’s after the tax deductions), so home ownership is 75% the same as renting from a bottom line perspective.
So, now you see that as a homeowner you’re only investing about 1/4 of your housing costs into home equity (the other 3/4 are being flushed down the toilet just like renting).
Home appreciation isn’t that great an investment. You only get the money from your home appreciation when you sell, and the act of selling your home itself costs a solid $10k or more (so, you’re paying a year’s rent for the privilege of selling your home). It’s a fucking terrible investment! Compare that to the stock market. If you sucked it up, rented your home, and put your savings in the stock market you would do FAR better than if you bought a home.
Because of the astronomical costs of buying and selling real estate, if you don’t live in the home you bought for at least 5-10 years (and probably closer to 10), it’s just flat out worse than renting. Renting, btw, is probably the most underrated personal finance decision you can make IMO.
The reason why home ownership is the source of so much middle class wealth is not because it’s a good investment. It’s because people need homes, it’s marginally (at best) better than renting, and it just happens to be where people put their wealth (The real money is in landlording, not home ownership).
Matt Bruenig goes into better detail here, but the tldr is that home ownership is a dogshit investment and you should only do it if you actually want to own your home.
https://mattbruenig.com/2021/08/05/home-ownership-is-still-mostly-renting/
And btw - when you say you’re paying the equivalent of a 300k home mortgage in rent, does that include property taxes, insurance, the principal and interest, plus another 3000-5000 dollars in annual home maintenance (or condo fees)? If not, then you aren’t comparing apples to apples. You HAVE to budget home maintenance into your housing costs if you’re a homeowner.