tldr: like most things in life, there is no "one correct answer". basically, the cheaper the property, the better idea it is to buy.

yes. this tool illustrates it perfectly. [http://www.nytimes.com/interactive/business/buy-rent-calcula...] it actually shows why the khan video is seriously flawed.

if you plug in the values he uses in the video: (which are stupid and no money manager in the world would tell you to buy a house like that)

  - $1,000,000 house
  - 25% down (all $250k?  really?)
  - 6% interest  (ouch...)
  - $3,000 a month in rent for 1600 square feet? (in the bay area!?!?  hahahahahah)

that, of course, adds up to a terrible loss of $200k after six years for buying.

now, let's change the numbers to something more reasonable.

  - $1,000,000 house. (1600 square foot house in the bay area)
  - 10% down.  (that's all you need and this leaves $150k for investment)
  - $4,500 a month in rent (according to zillow, that's what a 1600 square foot house rents for)
  - 5% interest is more realistic.

that is still a loss for the buyer, but it's $45k instead. plus, you haven't completely destroyed your cash flow and investment capital.

still bad tho, huh?

yeah. because buying a $1,000,000 house in an over-inflated area is dumb.

now, let's look at something where it actually makes sense.

- same house.

- cheaper area -- not everyone wants to live in the bay area.

from some real numbers on a house i actually own (tho, i don't live in it - we're renting it out)

  - $120,000 house.
  - 10% down.  (you have almost *ALL* of that fictional $250k left...)
  - 5% interest
  - $1200 a month in rent (again, zillow for that area)

that's a net win of $59k if you buy.

if i lived in the bay area and didn't need all my intangibles (like, putting in new countertops in my kitchen or adding solar panels if i wanted to), i would totally rent.

if i lived in kirkland? i'd sure as hell buy.