Nicole Lappin

home prices only appreciate about 4.5% per year.

That's good, but it's not S&P 500 good.

The S&P 500 has averaged around 10% per year over the long run, and that difference adds up big time.

Let's just do a simple side-by-side comparison here.

Let's say you're deciding between renting and buying in LA.

The average monthly rent in Los Angeles is three thousand dollars a month.

The average monthly mortgage in Los Angeles is five thousand dollars a month.

So let's say you rent.

You're saving two thousand dollars a month by paying the average rent instead of the average mortgage.

So you decide you'll invest

that monthly and you'll invest that 100k down payment after 30 years you'll have 5.7 million dollars meanwhile if you bought a 500 000 home after your 30-year mortgage is paid off your home will appreciate to about 1.9 million dollars which is awesome good for you but again with interest you'll have paid over 900 000 for your mortgage

which means that your margin is a lot lower than if you would have invested.

You'll have profited around a million bucks.

In the case of investing 2K a month and renting, you'll have spent $820,000 but made $4.9 million in profit.

So what would you rather have, $4.9 million or $1 million?

Don't get me wrong.

I'm not saying that buying is always a bad idea.

Buying can make sense if you plan to stay in the home for a long time, at least five to seven years, ideally longer.

or if your total monthly cost of ownership is close to or less than rent, or if you're in a market where rent is rising sharply and buying locks instability, or lastly, if you just want to buy a home and you can afford it, if it gives you the feeling of stability, that can be priceless.

Buying a home is not just a financial decision.