This completely ignores the cost of owning a home, such as repairs, improvements, maintenance, etc.
This also assumes a $5,250 down payment on a $150,000 home, which is insanely low.
If you take your $1031 that you calculated and add in maintenance/repairs, you get a larger number… lets say around $1250.
Also the average rent in Michigan is more like $750, so that is a $500 monthly savings from renting instead of buying.
This article completely ignores the opportunity cost of renting versus buying.
Potential Opportunity Cost: Lets say instead you take the $500 a month you save from renting instead of buying and contribute it towards a Roth IRA… you can make the full $5,500 contribution and still have $500 left over.
Also assume that you invest the $5,250 down payment that you didn’t have to pay… if you assume a very reasonable expectation of 7% interest(combination of stocks/mutual funds) over the course of 10 years you would have $91,637 in your Roth IRA plus an extra $5,000 in your savings(Leftover $500 after $5,500 max contribution)
Wealth Gained over 10 years:
Renting while investing $500 a month: $96,637 in Roth IRA
Your example in buying a home: $83,445
You also can’t guarantee that home prices will continue to go up at even a 3% rate.
Please be more objective next time, renting is not a bad option if you invest the amount you save from not buying/maintaining a home.
However, I guess for the general unaware population buying a home might be a better idea if they’re not savvy in investing.