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Comment by syndicatedjelly | Hacker News Reader

Because you can live in your investment. It’s the only investment that keeps you warm, protects you from the elements, and lets you raise a family in it.

Living in a present-day million-dollar home for a net cost of $500k over 30 years is a great deal. That’s a little over $1000/month on average. Where can you even rent an apartment at that price these days?

Also there are a ton of tax deductions that were left out of your calculation. PMI, mortgage interest, even certain types of maintenance are tax deductible. Not to mention green energy upgrades, depending on where you live.

Those sound small but would probably be enough to flip your -500k calculation into a significant positive over 30 years.

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It's definitely cheaper to own than rent in the long run, but like 15+ years.

House appreciates and keep up with inflation, but not a great investment vehicle because the nearly break even ROI. It's not all sunshine and roses contrary to common wisdom.

In my view, owning a home primarily acts as a safeguard against inflation, it represents a "safe" investment option for "lazy" individuals who reluctant to learn more complex investment strategies that could yield higher, riskier return.

> It's not all sunshine and roses contrary to common wisdom.

No it’s definitely not. Things break, seemingly in a coordinated manner. One year your maintenance costs might be basically 0, another year they could be 5 figures.

> In my view, owning a home primarily acts as a safeguard against inflation, it represents a "safe" investment option for "lazy" individuals who reluctant to learn more complex investment strategies that could yield higher, riskier return.

Yeah go find an actual homeowner in person and say that to their face. As a homeowner I can tell you that there’s nothing “lazy” about the home-buying process. It’s stressful, emotional, and challenging. I too dabble in “complex” investing strategies and I can tell you that something like covered calls or “The Wheel” is way easier and more predictable than the typical home-buying process.

At the end of the day, investing is about allocating risk. You keep some % of your money invested in low-risk, stable-return assets. A house is a great example. And you ESPECIALLY don’t invest money loaned on margin in high-volatility assets.

That and your example are kind of ridiculous.

Owning a home works out financially better than renting which is what you should be comparing it to. You can't compare it to a financial investment because its unrealistic to have $0 housing budget and put it all in the S&P 500 or anything else like that. I think you're getting hung up on the "owning a home is an investment" catch phrase and taking that literally.

Your example is based on averages, which in the real world don't exist. In a growing area, single family detached homes (i.e. not townhomes or anything with shared walls) are going to out-appreciate others types of homes. And location matters more than anything. Good schools, low crime, close to amenities, shopping, etc. and those houses will go up faster than townhomes or condos in a higher crime, worse school area. You can also help the appreciation on a home by doing improvements to it and the property. Convert a 3rd floor attic to live-able space by adding a bedroom and bath and you could see a house bump up into the next range of comparables for that neighborhood/area.

> Living in a present-day million-dollar home for a net cost of $500k over 30 years is a great deal. That’s a little over $1000/month on average. Where can you even rent an apartment at that price these days?

Can you clarify?

A $1 million purchase at 5% interest on $800K is $4,300 / month. Plus maintenance and taxes.

Where does the $1,000 vs renting apply?

No I was just talking about that “net cost” number the original post came up with. After all expenses, interest, and sale of the house, they were claiming they would lose $500k over the lifetime of owning the house.

I see. Thanks for clarifying.

$500K is BEFORE sell the house with capital gains. If you do decide to sell, the number is $3750/month average costs per month to living the house you own after 30 years. Still better than renting, but not as most of home owner had imaged.

I think you need to revisit your math. None of your final numbers make sense.

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