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Comment by bottlepalm | Hacker News Reader

I mean if you compare with buying a house, you'll build more wealth renting an apartment as they're typically much much smaller. Equities have better historical ROI than Real Estate, and that's when you diversify and buy an ETF, not one particular lucky stock/house.

Now if we're talking about 'buying an apartment' that'd be a better comparison, as in that case it would be better than renting if you plan to live in a single place for a long time.

The amount of money people blow every month on mortgage interest, maintenance, insurance, and taxes on a big house is easily more than many peoples' rents, but yet people are convinced that buying (before they actually need a house) will lead them to a better financial future.

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It all 100% depends. I live in lower Manhattan and it's hard to justify buying in almost all situations. It only pays off much further down the line, but it might not ever pay off at all if you consider the opportunity cost for your money.

This is true in theory but mortgages are the largest levered bet a regular individual can make, and there are other systemic incentives around home ownership making that bet play out disproportionately well

There is a thing I would like to buy called "having my kid grow up in a stable environment in a nice town with a nice school" that I would probably pay $5M for.

Luckily attaining this only requires a few thousand bucks a month for a mortgage and maintenance on a property in exactly a place like that. So I actually get a great deal, for $500k I get $5M value. If I rented so I can invest the difference, I doubt I could make $5M.

> There is a thing I would like to buy called "having my kid grow up in a stable environment in a nice town with a nice school" that I would probably pay $5M for.

Which is fair, and makes total sense, but to GP's point, there are people for which renting an apartment does make more sense. Example: I'm single and rent a 2 bedroom apartment. Every time I've run the numbers on buying a house in a similar area of town, it ends up costing me more because I'm buying things I do not want (a yard, a garage, extra rooms, etc).

I am in the same situation but every 6 months I come back to question it, I can’t help it.

Mortgage is such a huge leverage (with the risks that come with it)

I have to re-run the numbers all the time because my guts keep telling me to buy. Probably due of my cultural background where the first thing everybody did was buying a house.

You can't compare RE vs equities as 1:1 substitutes for wealth building -- RE offers you 5-10x leverage on your capital, something hard to come by and a riskier proposition (generally) in equities.

You can get the leverage from a broker, it just comes with the liability of your loan getting called anytime for any reason. The preferred terms, as well as government subsidies on interest rates can make leverage for homes have a better ROI.

Houses that were selling for 600-700K in 2009 are much closer to 1.5M now (e.g. in 94563 or 94549). While their property tax is capped nicely. Just saying.

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