> "For those unfamiliar, these rent/buy calculators attempt to estimate the cash flow over XX years for renting vs buying a home. For buying, this is the down payment, mortgage, taxes, etc, and then crucially selling the appreciated home after XX years. For renting, this is mostly rent, but also crucially investment income from investing the money that would have gone into the mortgage/down payment. When I recalculate these numbers, all I'm doing is saying that the default home appreciation rate and the investment appreciation rate should be updated in the tool, and showing the result of that."When you buy a home, you pay a down payment you counterfactually could have invested (and any difference in rent vs. mortgage can be invested). The article is just saying the calculators skew towards buying by underestimating investment growth and overestimating housing appreciation.
No comments yet.