idk much about this topic
median home appreciation rates seem to be similar to mortgage rates in a lot of places. does that mean the average home buyer basically breaks even over the duration of a mortgage?
In Toronto, where housing is out of control, the median house value has moved from about $300K to $950K over the last 10 years.
So, people who bought in 2011 at $300K with, say a $250K mortgage, have paid off probably almost $100K of the amount ($1700/month over 10 years with about half going to interest payments). <-- note their monthly payment has not changed in 10 years.
So, that person now owes $150K on a $950K house, meaning that they have gained a magical $650K in capital if they decide to sell.
Anyway, I don't know if this answers your question, it's just an accurate example of a mortgage from my city.
When you take inflation into account probably
But the big difference is that you basically get your money back at the end of your mortgage term in the form of a real asset, so you in effect are getting housing for “free”
I think the thing to recall that makes a mortgage a net positive over the long term is the rate of inflation. This effectively reduces the debt's value over time. Now that doesn't amount to anything if the labor market never adjusts to inflation either, but that's always been the finance advice I've heard about paying a mortgage. It's kinda supposed to be like a hedge vs inflation that you hopefully also get to live in.
This is on par with my experience. We bought a house in 2019 at around $200,000. Over the life of the mortgage (30 years), it's going to be like we paid $300,000 with the interest rate.
However, we bought right before COVID hit and jacked the prices up on everything. We gained around $50,000 in equity over the span of COVID and it's like we got a free $50,000. It makes it so we can refinance sooner, once the mortgage rates drop back down to lower than what we locked into.
