MB seems to make a simple error a couple of times here:
> So, the financial case for homeownership is much weaker than I think most realize, especially when compared to alternative ways of investing the same money.
> So these principal payments are generating a net return of 1.795 percent (2.295 – 0.5). These same dollars, if placed in a diversified stock/bond portfolio, would generate a much higher return than that.
The problem with this angle is that people in general have to have housing, and so they're going to pay a substantial part of their income either on rent on on a mortgage. There's rarely an option to invest "the same money" in anything else.
Overall this seems like a solid analysis, but the contrast with "what else you could do with the money" seems a little weird when that's not really a choice (unless you live somewhere with a huge difference between the cost of renting vs owning).
> So, the financial case for homeownership is much weaker than I think most realize, especially when compared to alternative ways of investing the same money.
> So these principal payments are generating a net return of 1.795 percent (2.295 – 0.5). These same dollars, if placed in a diversified stock/bond portfolio, would generate a much higher return than that.
The problem with this angle is that people in general have to have housing, and so they're going to pay a substantial part of their income either on rent on on a mortgage. There's rarely an option to invest "the same money" in anything else.
Overall this seems like a solid analysis, but the contrast with "what else you could do with the money" seems a little weird when that's not really a choice (unless you live somewhere with a huge difference between the cost of renting vs owning).