Buying a House vs Renting: The Real Cost Nobody Talks About
2024-02-05
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That $100,000 down payment doesn't just buy you a house - it costs you decades of compound growth.
The Hidden Opportunity Cost
When you put $100,000 into a down payment, that money stops working for you in the stock market. At 7% average returns:
- After 10 years: That $100k would be worth $197k
- After 20 years: $387k
- After 30 years: $761k
But Wait, Houses Appreciate Too
Yes, but historically housing appreciates at roughly the rate of inflation (about 3-4%), while the stock market averages 7-10%.
The Real Calculation
You need to factor in:
- Down payment opportunity cost
- Mortgage interest (often 2-3x the principal over 30 years)
- Property taxes, insurance, maintenance (1-2% of home value annually)
- Transaction costs when selling (6-10%)
Calculate Your Scenario
Every situation is different. Use our retirement calculator to see how buying vs renting affects YOUR retirement age.
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