Btw this a fallacy/bad accounting that many home owners fall into.

Most say $550K sale price minus $400K purchase price == $150K profit.

But you need to remove: Taxes, maintenance, cost of your time (if you value that at all), realtors fees, HOA, bank fees/insurance, home insurance, depreciation on purchases you only had because of home ownership (tools, lawn mower etc).

Once you remove those it's hard for home ownership to make financial sense relative to investing in the stock market + renting.

However, and this is discussed in another thread, homeownership is a lifestyle choice, and we should be ok with making financially suboptimal choices for the sake of a quality life. We just need to keep clear it's an expense for a purpose, not an investment for financial gain. If we overspend on house liability it's no different than overspending on cars or food or travel.

There is absolutely no way that all of the other costs of owning a home is approaching anywhere near the amount I am getting out of it.

Yeah, it's not a pure 150k return but it's still vastly larger than any other investment I could have made in 2018. It's not even close.

Calling this a "financially suboptimal choice" is nonsense.

$150K "Profit"

Scenario : 400K home, $40k Down, 2 years ownership, using a realtor, getting 7% loan (today's reality, maybe not yours)

* $14688 Closing costs -- according to nerd wallet on a 400k house w/ 10% down

* ~$33K Interest -- $500K on 30 yr loadaverage is 50% interest per payment across the whole loan (much worse in first 2 years)

* $25K Realtor commissions on sale (using conservative 5%)

* $8K Maintenance - 1% per year is a standard rule of thumb

* $8K Taxes - using national average on Smart Asset https://smartasset.com/taxes/property-taxes#2YWD4iYqn0

* $1K HOA

* 10K Downpayment + $24K equity portion of payments are Return of Capital (not profit)

Net profit = ~30K profit in 2 years.

You're double counting the down payment and equity payment. It doesn't count against the profit of the simple $150k number unless you lower the mortgage balance which would increase the $150k to $214k.

Another way to look at it is that even with your numbers, a 40k investment was turned into 1.25k monthly dividend vs. -2k month or so in rent (rough number based on house price).

Yeah, that's what I was thinking too.

You're not just 30k up from where you were two years ago

You're also up 78k from where you would be today if you had been renting at 2k/month those two years instead

It makes a lot of financial sense when it's leveraged. That fictional 150k profit was on 5-20% down of the purchase price, plus the payments made until sale. If you live in it for 2 years you avoid capital gains taxes, and if you go the other route of renting it out you deduct expenses.