Is Buying A House Still Worth It?

There are a lot of factors to consider when deciding whether or not to buy a house. In this video, we'll discuss some of the pros and cons of homeownership and help you make an informed decision.
Timecodes:
0:00 - Intro
0:23 - Pros of Home Ownership
2:41 - Cons of Home Ownership
8:33 - Tae’s Personal Thought
10:43 - So When To Buy A Home?
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DISCLAIMER: I am not a financial adviser. These videos are for educational and entertainment purposes only. I am merely sharing my personal opinion. Please seek professional help when needed.

[@paulapoblete1090]

To be honest I've felt more emotionally estable when renting, knowing I can upsize or downsize as needed, and move freely I moved a lot as a child but it was always a positive experience for me. I guess it is all about how we interpret the experience. My son has moved with me too, and home has been where mom is. He seems content with every move we make, by choice. But I understand it can feel more like stability for other families.

[@tessconrad2308]

I hope to one day talk about my childhood trauma of being housing insecure as easily and matter-of-fact as this man can.

[@ArnoKitteh]

The road is long and hard, but fruitful. Keep it up

[@SaintlySaavy]

😂

[@abcdLeeXY]

Home for a family is definitely worth it. Pay minimum down payment. Make sure you can still save 20-25% of your household income for retirement/investment after mortgage and other expenses. A lot of our peers with similar income tends to buy “too much” house.

[@PaoloVarquez]

Do the math if you live in CA

[@Darkviking872]

As someone who just moved to a new state and was thinking of buying a home. This video really helped me reconsider. It's not for me at this time in my life. Thank you for the video. It came at the right time.

[@TaeKimFinancialTortoise]

Glad it was helpful!

[@loganbrion1469]

By far the best personal finance channel on YT. Great work!

[@DrProgNerd]

By the time I was twelve, my family had moved 13 times. Leaving old friends and having to establish new ones was difficult as a kid. I bought my home 24 years ago. My 19-year-old son has lived in only one home his whole life. I'm sure that sense of stability has significantly contributed to him becoming a well adjusted young man. When he turned 18, I told him that he could live at home for 'free' - but he had to save money to buy a house of his own. In the next 1-2 years he'll have his 20%+ down payment saved. Of course I also nudged him to contribute to his 401k.🙂

[@johnraviella6561]

The ability to rent part of the home is just night and day vs. renting. The mortgage companies also act in accordance with RESPA, which is enforced by CFPB. I spent roughly the same in base expenses (mortgage, all escrows including taxes, applicable mortgage insurance, homeowners insurance, and taxes) as I would renting. It's well worth it, especially since everything is new in the home. Take advantage of first-time homebuyers assistance! Tae - the commissions are generally paid by the seller! Not the buyer. One is able to rent the property and move elsewhere. Owning the property is not as limiting as you make it, though I get your point.

[@marvinbernal]

One of the best channels I've stumbled across in awhile. Thanks for breaking it down!

[@bendimiero380]

This is a great video Tae - its refreshing to hear someone talk about opportunity cost when it comes to home ownership. I feel like the topic of real estate is often just a perpetual echo chamber of positivity for the financially illiterate.

[@attikaifinch]

Excellent video, explained very well. Have been wondering about this for some time. It seemed that the prevailing wisdom is you should always buy a house to do well financially almost like a requirement. This helped me understand that it isnt necessarily.

[@brunothebravegaming3344]

Solid info, very understandable presentation. Look forward to more, subscribed!

[@thetangster]

Great info…it is definitely a headache buying a home, but I recently purchased a new construction home because of the ideal schools for my young children. I figured the monthly cost of owning a home is justified because I wouldn’t have to pay for private school. The hardest decision is to change the way I’m saving. I’m saving less in other investments which delays my savings goals almost another decade.

[@ordinaryhuman5645]

The idea of buying a house for child education is so ridiculous that it highlights how bad government schooling is. It really shouldn't be possible to efficiently buy better education indirectly through a house.

[@sf8442]

@@ordinaryhuman5645 Unfortunately, that is the reality for many countries. Pricier homes, more taxes, the parents in that zone are most likely better educated if they have that money, kids are more willing to study. Result: better school. And the cycle continues

[@ordinaryhuman5645]

@@sf8442 The funny thing is that it's not even the school that's so much better, at least not directly. It's just full of kids from richer stable families that are likely do to well regardless of school, while the poorer schools are more likely to have kids from poor single mom households that will struggle regardless of school. The latter kids tend to do worse in every way compared to the former, regardless of the school involved.

[@josephrosenthal9290]

Going to the next video you recommended IMMEDIATELY! Thank you for your insight on this current non-hime owner!

[@jacquelinebhg2325]

The part about opportunity cost of investment with you neighbors home, that thought 🤯🤯🤯 shows why its important to invest alongside putting your income towards other goals. Amazing thanks for that angle on that 👏

[@johnmatthewtennant]

It’s not apples to apples. You can’t buy an ETF with 20% down

[@jennatucker]

This is really helpful, Tae. Thank you!

[@digitatissue8502]

This was so informative! Thank you!

[@Booz23]

Thank you for your videos!

[@unkindguy88]

It is best not to consider your HOME as an investment.

[@davidking4009]

Care to add some value and elaborate?

[@jomembawang]

@@davidking4009 the place you live in, if you consider it an investment, it's a dangerous rabbit hole. A rental property is an investment, not the house you live in, because in order for you to reap the benefits of that "investment" you would have to sell it.

[@davidking4009]

@@jomembawang I see. Thank you!

[@vexxlnc430]

If it doesn’t create income then some would consider it a liability

[@RandomJane104]

It's more of a hedge against inflation and forced savings than an investment.

[@shayphillips]

Very well done my friend

[@ohhhgggeeezzz]

Thank you so much. Soild info....

[@El_Sergio]

Thank you, friend!

[@rodrigotorres2068]

Good videos … thank you You’ve got a new sub

[@vishanth2]

This video is pure gold 🔥 💯 !!!

[@carlo6912]

Good example and a good reason to do both.

[@lbsubstylee]

Thanks, Tae!

[@HazyJay]

Thank you for talking about the opportunity cost of investment. I always see people say "I have a xx% return on my property" when the return on the S&P or even treasury bills would have been similar. Stating returns in isolation is relatively worthless.

[@peterl2767]

Great thanks 👍

[@JoseBonilla-zb6hk]

Good information thankful sir 👍✅

[@123lowp]

Great videos

[@xeekae]

Awesome video, can you make the same video but for cars? Used/new?

[@livetolearn2022]

Amazing comparison

[@hshshs889]

Tae, great video. Although, have you considered when you are giving your neighbors as an example, you are assuming they had the $27,000 in cash in 1957 to be able to put them in a low cost SP500 index fund (which didn't even exist anyway in 1957, but that is a different conversation). Most people don't have the cash to buy their homes outright, so they wouldn't have had the cash to invest it in the market. So I would argue that being able to leverage someone else's money - i.e. the Bank who gave you the home loan - you can build some wealth which you would have been unable to, and not all, but most of that monthly payment, you would have paid in rent in most cases.

[@megazombiekiller9000]

I am currently in the position of taking a job in an new state, and I was weighing my options on this topic. The one thing that stands out to me the most is that where I am moving rent is often 10-20% more per month than a mortgage payment on a similar house would be, not to mention rent has no return on investment at all. Looking back to your $27,000 example, that's roughly what I would be looking at spending on just rent in the next year and getting no return overtime at all, so what would be the point in not buying a house? Even if it came with 10% fees on top, that would be only slightly more than the what would otherwise be wasted on rent over just one year.

[@matrixphotodesign]

Finally some common sense financial info.

[@SIP612]

Thanks 🤗

[@Jendian]

The biggest benefit of homeownership for me (apart from stability for my family) is keeping rent/mortgage “fixed”. Even with rising property taxes and homeowners insurance my monthly mortgage payment with escrows is still cheaper than it would be to rent. Another benefit is freedom. I can paint my walls whatever color I want as many times as I want without having to ask anyone for permission, I can take on home projects and not worry I can’t enjoy it in 5 years if the landlord decides not to renew my lease, etc. I’m the type of person that likes to put love into my home and constantly improve whether I’m buying or renting and when I was renting I felt very restricted or like I was investing in someone else’s home. I love homeownership and think it’s a better deal than renting. I agree it’s not a good investment but renting isn’t either

[@paulapoblete1090]

OK on the financial part I agree, if I had a home that would be a great asset for my family.

[@enbofficial3044]

Very balanced video--nice work. I would caution anyone against thinking of your residence as an investment. Doing so has rarely turned out well for anyone.

[@brettdeasrealtor]

Buyers don’t pay for the commission. Sellers do.

[@benbockting7511]

A couple things. In general the seller pays the realtor costs not the buyer so that isn’t a factor. In addition if you can put 10% down on a conventional your pmi with good credit will be minimal and you can start building equity earlier. And, with the Va home loan there is no down payment/no pmi and all you have to worry about is closing costs

[@Triathlon101]

I really liked the video! I was wondering though what your thoughts are on if you do have the 20% for the down payment, and instead of putting that down on the home, go the PMI route and invest some of that 20%. This way even with the PMI rates, you could get the benefits of let's say the stock market returns and owning a home at the same time. Let me know what you think and I look forward to more videos!

[@jollyroger3179]

Very informative, thank you! However, some things are a bit backwards I think: 1) The example with 700k vs 9m: doesn't take into account how much would they have to pay for the rent. If it was over 4,5% of home price yearly, all those extra money from an index would've been eaten up by rent. 2) 80% vs 65% homeowners with high income vs all: people who started out owning a home (inheritance or a present from parents) would naturally have higher income over time, assuming they invest. What do you think?

[@samschumacher721]

the 700k vs 9m case is reflective of a one time investment of $27,000 that sits and compounds for 60 years - you would have 9m regardless of what else happens, so long as you don't touch that investment. If you own the home outright, indeed you have more monthly income to invest, but that lives outside the bounds of this scenario.

[@ricardopalma3714]

@@samschumacher721 hi sam. you have the last name of one of my favorite baseball players :) anyway, im new to this stuff and have 2 simple questions about index funds. I want to start by putting 20k into index funds. i understand that it will compound with time. 1) so to get the most "return" of the investments, i should keep adding as much money as i can to the fund consistently right? say 30% of my monthly income going into the funds will show a better growth or return??.. 2) Having money aside and compounding for the long run is great, but say later on down the line, I want to treat myself with a trip or something, do I simply withdraw 5k from the funds like a checking account? how will the funds be affected by my withdrawal? thanks if you can help answer these, its questions like this that keep me from actually starting..

[@samschumacher721]

@@ricardopalma3714Regular, steady contributions to your savings and investment accounts are a big part of good financial hygiene, definitely strive for it. More is better, but most guidelines will have you saving & investing 25% of your income assuming a "normal" retirement timeline of 65 Years of Age. If you're at 30%, you're doing an excellent job. GROWTH In that scenario, there's actually NO additional contributions - only the initial 27k investment. That doesn't excuse you from additional monthly contributions, though (: WITHDRAWING FUNDS The best way to pay for the vacation of your dreams is to keep your investments and short/long term savings separate. Have a separate savings account for things like vacations and car maintenance. It's probably easiest to think of them as separate budget items. You put 15% of your income towards this investment, and another 10% into a savings account to pay for the big expenses in your life, and never co-mingle the funds.

[@ricardopalma3714]

@@samschumacher721 thanks Sam! Okay that makes total sense, I will keep a side savings for spending in the now. So the end goal to all this investing in stocks is to have enough invested to be able to live off of 4% of it annually right? Then that 4% just keeps "regrowing". Then I can retire? Lol. Also, so you're saying in regards to growth, say I put in 30k, I leave it alone and let it compound for twenty years, will I get the same result if I put 30 now, and 30 every year after that? I was thinking that the more of my money i put into a vanguard account now/monthly, the more/faster I will accumulate wealth? Thank you so much for your time. I follow the channel's advice, live frugal, and make ~130k/yr working a lot of overtime. Im just not trying to work hard till im 65 or whatever :(

[@samschumacher721]

@@ricardopalma3714 Yes, regular contributions will help you build more wealth vs no additional contributions - the real headline, though, is that compound growth over many years is the true builder of wealth. In the 9m example, the principal had 60 years to grow. The more principal you start with, the more this effect is multiplied.

[@kenkenwelch]

Thank you, Tae. What are your thoughts on using the debt to leverage appreciation on a larger asset? For example, a $350,000 home would appreciate faster than if I invested $35k (Down Payment) and contributed the difference between mortgage payment and renting each month. Your example made sense for the older couple because the starting point was the same. I'm genuinely curious because I am looking to buy a home, but not convinced it is the best financial investment.

[@johngalt5166]

I would add that you have to have somewhere to live, so you might as well be paying mortgage. A $1000 mortgage is building wealth. $1000 rent is just getting by.

[@josealvaradotorre6870]

Yes, which is why mortgages tend to be more expensive than renting for the same property, so you still have a significant opportunity cost.

[@salvatoreharvey3520]

Yea, crappy right now how my rent is about 4000 but a mortgage on the same house would be about 7500-8000 :/

[@timcareymusic]

$1000 mortgage doesn't exist in the US.

[@johngalt5166]

@@timcareymusic It was just an example..

[@timcareymusic]

@John Galt Sure, But $1000 rents absolutely exist. Just pointing out that if simplicity and a higher standard of living are important to you, renting can be a great option in a lot of cities. For example Seattle where the median rent is about 2k but the median mortgage payment is $5300

[@amirabaschameleon]

I like you videos Mr. Kim. What percentage of post tax money you think should be spent on the mortgage (including insurance, property tax and maintenance cost)? 28-30%?

[@PhilHall-zb5bg]

Correction for this video...The realtor is not "one of the biggest cost of buying the home". The seller pays both realtors therefor the realtors are one of the biggest cost of selling a home but not buying it.

[@RoyalH3iR]

What about when you sell the house? You’ll pay it later to recoup the investment.

[@ShaharHarshuv]

This just convinces me what I already thought of - buying a home is a bad idea. Seems like the only incentives in doing that are emotional and not financials. In my personal opinion, even for the motional aspect - I would rather not owning the home and not having to deal with maintenance and insurance costs - that just sounds like a nightmare. The fact that index funds are a better investment in the long run is even a better reason why I shouldn't buy a home. If you take the example you gave, and the difference in return for 60 years is $8.5M, even if you would have paid $3K monthly rent (which is considered very high) you would still be left with $6.4M return, which is an extra $8,900 a month on average! That's a crazy difference.

[@f430ferrari5]

Tae. I really don’t think the investment comparison is true apples to apples. The 27k investment in the home allowed them to live at basically $150 per month “rent” after the mortgage was paid off. Even with the mortgage by 1977 or 1980 they were only paying probably 350 when rent was already 600-700 or more. Look at what rent is now. 2.5k per month? More? So all those saving per year could have been invested back also. We have not even talked about tax savings. The interest expense and property taxes were all tax deductible back then and so significant savings achieved and those savings could have been invested also. I think the biggest stumbling block for those who want to buy a home os they they can never seem to save enough for a down payment. I also think the home maintenance is a bit high. Those items you mentioned won’t reappear each year. Should last you maybe 10-15 years. They are also not really “expenses” but investment in the home. Great advice as usual though. Enjoy your channel. 👍

[@TaeKimFinancialTortoise]

Great points! Thanks for the additional thought!

[@Cwilly13ify]

I was going to add, did we look at the leverage involved at all? the home's total value was 27,000 but they didn't put 27,000 down most likely. Their cash on cash return was likely fairly substantial over the years but we would need to know the down payment, mortgage interest etc. to make a fair comparison.

[@AlanHuiRealty]

Great points! Ultimately, buying a home should be based on an individual's situation. There is a right and wrong time to buy. Write-offs? Cashflow? Appreciation factors? Leaving your money in the bank? Stocks vs buying a home? Long term vs short term? Retirement? There are just so many factors.

[@JeanValjean875]

It just depends on your situation. If you have a family and want to establish roots then yes. If you are single and might be moving again then maybe not.

[@SOURCEw00t]

Tae, love your videos. As a fellow veteran, I'm surprised you haven't done a video on VA loans and mortgages. I understand you're talking to the general masses, but don't forget about veterans. Look at that, I just gave you roughly a week of homework 😅

[@tha073926]

PMI will get adjusted based on how much you put down. If you are able to put close to 20%, your PMI is almost negligible. It can be quickly written off in a few years. The other thing is that when you rent, you are paying someone's else mortgage and not building any of your own wealth. With rent increasing drastically all over the US, it almost makes sense to buy a home if you can lock in a 15 or 30-year fixed rate mortgage. Some rent will be the same if not more of the mortgage payment you would be making for a similar property if you were to own.

[@user-nn7uy3ri3j]

You have to restructure loan to get out of pmi , if you currently pay 4 or less intrest it is worth paying pmi

[@gaurangbhatt9662]

This video is very misleading. That 27,000 home would have cost 5,400 in down payment. With 5,400 they brought rent control for life where their rent doesn't go up for the loan term (30 years nowadays) and no rent afterward. If you consider the monthly mortgage payment "rent" you would have paid anyway at total loss, then they got 700,000 from 5,400 ... returns change significantly. In the scenario where you didn't buy the house, rent would have continued to rise and you would have no real value at the end of the loan term. Additionally, the interest payment for the house was tax deductible AND upto 500,000 gain on the house is tax free. All of these are benefits IF you take a loan... which most people should for a house. Additionally, after the loan period, the rent is gone, and you can invest your rent into index funds as well. Finally, having a home gives you the ability to refinance for a lower rate on the same price. Shopping for a home with a low rate will just mean higher prices. If you can afford the 20% down and a monthly payment on a house, it quickly turns out to be the best investment for the tax savings alone.

[@ChefReginaCooks]

Perhaps I missed something, but I thought Tae was going to cover rentals and FT RV Living as well. Maybe I wasn't paying attention. RVs may not be a wealth-building tool, but many are opting for this lifestyle and saving money in the meantime. Also, I'd love to hear your opinion concerning age thresholds for buying a home. For instance, how old is too old to first-time buy?

[@tha073926]

Honestly FT RV living is really not practical and has been grossly glamorize by social media. Most people that do it (the ones that aren't forced by necessity) last for a few years top at best. Old coworker of mine did it for 3 years only. Lots of issues and struggles come along with the RV life that most people don't think/talk about.

[@ontrackfamily2022]

If you have the 20% would you recommend placing 3% down then placing the rest on first months?

[@benvail6395]

Great video again, Tae. The $9M example didn't consider increased costs of rent going up for 60 years, costs associated with moving between rentals every few years, etc. which could eat into their ability to invest. You also make it seem like PMI is the boogeyman, but there are circumstances where buying a home with less than 20% down makes complete sense. Ask anyone who skipped out on buying in 2020 or 2021 because they assumed 20% was necessary if they're happy with that choice. Many were not able to out-save the twin problem of rising prices and rising rates. Had we waited to avoid PMI (less than $100/mo), we would not come close to being able to afford the home we are in today.

[@jamesc3953]

I believe the example was a one time investment in the s&p 500 of $27k

[@fandoms5ever]

Yes I’m very much enjoying my 2.8% interest rate with a little PMI. Other investments are gaining more value than the PMI is worth. This video is very simplistic. There’s so many other factors at play.

[@dlsodadl]

well you need to mention that the cost of real estate agents is paid for by the seller not the buyer.

[@ClintWKennedy]

They paid $25k for the home 60 years ago, but did they pay cash? Or did they do a down payment? People often do this calculation like they actually had $25k cash 60 years ago, and more often this isn't the case. Just because someone will give you $25k to buy a house doesn't mean they will give you $25k to put into the stock market. Also, you still have to pay rent to someone.

[@tk_attack]

Understandable, but his example still holds meaning

[@Wilvin]

Bro, even if they had paid $3000/month in rent for the last 60 years. Total rent paid would be WAY less than $8 million. Basic math. Renting and investing elsewhere is financially better than buying a house.

[@ClintWKennedy]

@@Wilvin basic math indeed. My point is that you wouldn’t start with a $25k investment. You would start with $5k (20% down payment ) or something like that. And you still need a place to live. So the result would not be $8m.

[@Kgsoloman-ou6wm]

@@Wilvin The point nowadays is that you're going to be paying $3k for rent, or $ 2k to own a home per month. The 2k contributes $24k per year to your home, and you'd have an additional $1k per month to put in stocks--12k Annually, if that is your goal. Otherwise you're spending 36k annually into nothing (renting). The point is, you can do both.

[@danielcalderon5647]

Can you do a video about VA Loans?

[@paulapoblete1090]

Omg I don't mean to disagree with all you say, I swear. We live in Florida. And I have to go out of my way to meet neighbors. People keep to themselves. My community is the friends I've gathered over the years and we all live in different neighborhoods...

[@danlaclair01]

Solid advice, but I would say the vast majority of Americans do not or will not ever have 20% saved for DP. Take a low FHA loan with 3-5% DP then wait for your house to increase in value and drop the PMI. Then if you ever sell take your equity and use it as your 20% DP on future homes. It's all timing and luck but it's not that hard to pull off. You just have to wait for an upswing in the real estate market.

[@slayingodz6119]

Hi Tae, in the example you brought up of a $27k investment in the SP500 growing to $9M from 1957 to 2017, there is something that doesn't quite make sense. Historically the SP500 doubles every 10 years, so over a 60 year period it should be about 2^6 or 64x the principle. However, $9M comes out to over 300x the principle. This $9M figure that you bring up seems to be overinflated. I believe the issue is with calculating the growth using an *average* annualized return. Take the trivial example of $1 principle invested for two years: in one scenario, let's say that it has 10% growth per year, and in another scenario, let's say that it has -20% growth the first year, and then 40% the next year or vice versa. Both scenarios have the same average 10% annualized growth, but the end value of the principle is very different: 1.1*1.1 = 1.21 vs 0.8*1.4=1.12. In other words, using the average annualized return to calculate growth does not accurately reflect actual total growth. As a matter of fact, I think that given an average annualized return of X%, the maximal total growth is achieved by having an actual return of X% each year--one could probably mathematically prove this pretty easily. However, the market is not defined by a year-by-year consistent growth rate, so the average annualized return does not reflect anything about the total return except a loose upper bound. Looking at an SP500 historical calculator, it looks like a lump sum of $27k would grow to about $1.35M from 1957 to 2017, or 50x. Even though this is still more growth than home equity growing to $700k, it is not absolutely clear that it is enough to counterbalance 60 years of paying rent.

[@slayingodz6119]

Nevermind, I am wrong. Average annualized return is calculated as a logarithm, not as sum divided by number of years. It is true that the principal of $27k in the SP500 would grow to $1.35M over 60 years, but this is without dividend reinvestment. With dividend reinvestment, it comes out to $9M+

[@Andre-mi6fk]

Most common way because that's what US marketing dictates, so the worker bees flock to the same flower. With all those fees and expenses, buying a home seems more like a liability than anything else. It's a lifestyle choice.

[@davidking4009]

With a VA loan you will be exempt from a down payment and PMI making it the best loan option. So in that regard, it makes sense to buy a home within your means.

[@dre32pitt]

USDA Rural Loan is also exempt from down payments and PMI, but do require you to make UNDER a certain amount of money.. I'm currently waiting for the market to come down so I can deploy a USDA rural loan first, live in it for a year (USDA requirement), then rent it out and deploy my VA loan..

[@ARZiehm]

Yes, but there are a lot of people who don’t qualify because they weren’t service members. Not a reality for most of us.

[@DocGamer99]

If you ever pay attention to the details on a VA loan, its very obvious that there is a fee, not called PMI but is similar in amount to PMI. So you are still paying PMI, they just don't call it that. Most military benefits are jokes, so don't expect a great deal from the VA loan.

[@dre32pitt]

@@DocGamer99 PMI is monthly, usually several hundreds of dollars a month, and lasts usually 3-7 years depending on the agreed upon terms.. VA points are what you're referring to I believe.. If you have a 30% (or higher) VA disability claim, you don't pay the points. And the VA points is a percentage.. The most I've paid is like $3500.. and that was rolled into the loan.. Can't do that with PMI payments.. I've had 0 issues the three times I've used my VA home loan benefit.. Picking the right lender definitely helps.

[@DocGamer99]

​@@dre32pitt Good, so you know what PMI is, I do not know what VA points you are referring to so I don't know about that. What I do know is that your definition of PMI iswhat the fee that is on every VA loan where you don't make a similar down payment gets. I believe its called the VA funding fee, but I think it went by a different term when I got a VA loan quote because my VA funding fee was tied into the monthly payment instead of the one time payment a VA funding fee is supposed to be. I pointed to the rep that was handling my quote that the fee looked alot like a PMI payment, and the rep pretty much said "I've never thought about it that way, but yeah its pretty much the same". So no, I'm talking about a fee on VA loans that is basically PMI, they just don't call it that. Also the interest rates on VA loans, I've heard is worse than normal loans, and also lets be honest, allowing people to buy a house when they can't really afford it, doesn't help them. So, I say again, the military benefits are a joke.

[@exagem]

Not considering that rent will go up over time, tax breaks from mortgage, and inability to move for a better job if you own a home. Otherwise, very good video

[@Wilvin]

The example he gave of neighbor's house appreciation vs. investing in S&P 500 for 60 years is the end of the discussion for buying a home for financial reasons. Buy a home if you want for other reasons, but don't fool yourself into believing it will be a better financial decision than renting.

[@ROVA00]

Why wouldn’t be a better financial decision than renting, when the money from mortgage goes into your own name and rent goes into nothing

[@sunshinegrace3293]

In my neighborhood rent is 5000 but my mortgage is 3800 which includes property tax, principal and interest. When I file taxes at the end of each year, itemize my deduction and includes that interest to reduce my taxes. That factored into the monthly mortgage cost... additional savings. My home appreciated in equity a few hundred thousands in a few years. Home ownership wins by far. That mortgage payment is fixed except for a small increase periodically for property taxes. Rent will continue to increase. In 30 years I will own my home including the equity. Great way to accumulate wealth.

[@jroseandhearts]

@@sunshinegrace3293 sounds like you bought at a good time. The mortgage would likely be much higher than renting for those trying to buy in your area now.

[@Crozbozy]

The bottom line is since rates have gone up and house prices haven't gone down sufficiently, mortage repayments are significantly higher assuming 20% down, not to mention the opportunity cost of the deposit -- renting is better at the moment.

[@Yupthereitism]

Renting is never better

[@Kgsoloman-ou6wm]

@@Yupthereitism It really depends on your market. In a state like Texas, you could have a large, stunning home for sub $250k. In Fort Lauderdale, you'd spend $300k on a home in the ghetto that would never recuperate it's current cost. Homes in good locations are $500k +. If you're comparing a $2k rent, versus a $5k morgage before property tax and HOA, then yes, renting is more feasible and therefore better for most people. It would be better for most to keep the $100k they have liquid, in assets, rather than peak market homes that will not recuperate their cost as they are excessively inflated currently.

[@Yupthereitism]

Homes are not investments, they are living necessities.

[@therealstephenschott]

Bit of misinformation on the Realtor commission and closings costs. I have never spent 120k on a 400k purchase without that 120k mostly going towards the principle of the house. For a 400k purchase you can expect to pay 20% of 400k + title and bank fees. That would at MOST be 85k. The commission is paid by the seller in most areas, and the selling agent pays the buyers agent part of the 6% commission, so the cost is already built in to the price.

[@paperthin8794]

HOA fees can be a lot too

[@Kgsoloman-ou6wm]

In my particular location, if you bought a house 60 years ago, it would be sub $60k. And would be worth 300-500k now. After the first 30 years, the home would have been paid off. Let's assume you're morgage was $500-700, Which after being paid off, would save you 180,000 over the following 30 years. If you invested half of that, $90,000 , you'd have a home, and a hell of a lot more than 8,000,000 in investment portfolios. The point is, you can do both.

[@lailaatallah1857]

Excellent video! Also, I heard that the networth of an average US renter is somewhere south of $4000, I believe, whereas the networth of the average home owner is somewhere in the ballpark of $265,000.

[@krellin]

i dont buy mainly because i cant find where i would like to stick long term

[@user-nn7uy3ri3j]

Buying a home with a mortgage is not a great long term investment! Factor taxes and maintenance over those years 😢

[@TheSteinbitt]

I think you're forgetting leverage in home ownership. Your neighbours wouldn't have invested with leverage in an index fund.

[@Flipflop437]

I think some of this is a little misleading. Yes, home values grow slower than S&P500, but you aren’t factoring in the benefits of leverage which often boosts the IRR of buying a house.

[@nickkkk495]

Closing costs are not 5% 😂 they are 2-3% and buyers don’t pay a real estate commission

[@DACHANMAN1]

Best investment ever. Buy a new house, use it up, then sell for twice the value.

[@CMoore-Gaming]

I think you can't compare a home to an investment portfolio. You always need a roof over your head, if you are not paying off a mortgage you are paying someone else's.

[@mantiscity]

If the agents fee is 3%. Then they split it at 1.5% each

[@kaidrewry552]

I would wanna own one day, but as of now, since I don't have roots and I plan to hop from one place to another, it's not relevant. Also, you don't really own your house until you stop paying mortgage.

[@theanswer1993]

Never rent. That's like throwing away money.

[@andreapayneconnally390]

But you have to live somewhere. So why not own it. otherwise you'd rent it. So there you go. Buy. Homes well maintained do go up in value. Renting is just throwing it away.

[@Jendian]

I agree and especially in markets where rent is more expensive than monthly mortgage. This is the case where I live and even with high rent the yearly rent increases are brutal

[@andreapayneconnally390]

@@Jendian that’s what it’s like where we live. Our home would rent at 1500 per month. Our mortgage is 1100 a month. We’re saving money while building g equity. It’s insane to not buy unless you only want to live there for less than 3-4 years.

[@aldof.2966]

Im not sure if you Invest today 700k in the stock market you will get the same results, 40, 50 years from today.

[@dayvonspence3660]

In the United States and Canada, you don’t own anything. If you don’t pay property tax the government wil take it. What you have is a long term rental contract which you can sell and pass down. In 2023 I wouldn’t want to buy a place and live there for long periods of time, with technology we have now I want to be fluid and be able to move and not stress about selling a house.

[@ds5651]

What's the other option rent 😂. Rent will only go up over the next 20 years. You will be locked in rate and be paying with 2023 money

[@jamesrecknor6752]

Renting is still buying it, just for the landlord.

[@joshuajohnson1508]

Dude, this is about buying a home. A buyer does/should not be paying the commission

[@seanchoi6013]

With all due respect, this is a poor video overall - especially comparing the S&P500 investment returns to the appreciation of the house bought at $27,000 70 years ago. You do realize if the couple rented during the period, they would've had to pay rent as an expense for those 70 years right? The couple still has to live somewhere, if the couple didn't throw that money into the house, they wouldn't have a place to live. Also don't forget the fact the couple probably only put down 20% of the $27,000 as a down payment - theoretically they could've done this for 5 homes with the full $27,000 amount, assuming 20% down payment each. You also did not discuss the numerous tax benefits that come with homeowning - leverage, 1031 exchange, HELOC (with which they can purchase more investment properties without paying taxes on gains), interest write-off, etc. Whereas stocks? NONE of these benefits. In the US, the average person is most likely to become a millionaire from owning their home.

[@bypassbypass521]

alright.. i ain't buying a home ever

[@RaquelJoYT]

You never will own it even if it’s paid off.

[@dannbaman]

Just get a condo and start living like most people in europe or Asia instead of buying huge mansion and waste of nature

[@hlhl2691]

You're forgetting the big three: Possible rental property cash flow Tax deductions for high income earners And Inflation The combination of these three things takes it to the next level

[@shortstraw4]

If you live in California the answer is no

[@notreal6032]

I like your videos but the fake chuckling when speaking is brutal lol

[@tianhelenaa]

No useful info at all. It is no more than platitude.

[@williamforsythe9180]

NO no no no 1000 times I scream “NO!” Do NOT buy a house