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If you buy a $100,000 home for cash, and it doubles in value after 10 years, you made $200,000. You tied up $100,000 and made $100,000. Of course, the Realtor will take 6%, or $12,000. So you will net $88,000.

Now consider that if you put that $100,000 in the stock market at an average of 10% return for 10 years, and pay $600 a month in rent, or whatever the local equivalent is where homes go for $100,000 today, you just MIGHT have made more than $88,000 in the market, even accounting for the money you wasted in rent.

I’m not going to do that math, but that is the question. What is financially better. In this case, I don’t know, but I am NOT going to take it on faith that tieing up $100,000 in a home is going to outperform a $100,000 investment in the stock market.

And THAT is the crux of this entire discussion. For a given home price, down payment and monthly rent, which combination of numbers makes it worth owning or worth renting. Because if I could rent for $1 a month, I sure as hell won’t buy. If I can own a house for $10, I sure as hell won’t rent.

The financial question for each of us in each of our locations in the USA is, how much does rent cost compared to buying. Is it cheaper to buy and have a home that appreciates, or is it cheaper to rent and invest the balance? Every location is going to have a different answer and it WILL depend on each person’s income and tax liability.

This is pretty complicated. I don’t see a once-size-fits-all simple answer such as “buying a home for cash and having no bank payment is always better than renting.” I just don’t see it. It is a case by case basis.