The S&P average return rate over 30 years is 7.5%. Assuming you invest all 100k from the start you would have 800k after 30years and that's assuming having a consistent index over 30 years something that is less guaranteed than the Property market.
You will usually not be as lucky.
$800k is still likely more than the house, with less worry, less locking, and less work though.
In my country the rent has usually been more expensive than the cost to service a mortgage (particularly taking into account only the interest repayments, not the principal repayments).
Mortgages are one of the only easy ways to leverage 5x for the average person, and over the course of 30 years you can expect to be earning more (inflation of your salary) whereas the mortgage stays the same.
Rent, on the other hand, typically rises in proportion to your income, so your cost are increasing each year. With a mortgage, your costs are either the same or decreasing if you repay the mortgage faster than the initial term.
Where I'm from, interest and dividends from other forms of investments are taxed as income, but repaying your mortgage is not. In addition, as long as it continues to be a desirable place to live and incomes keep rising, real estate prices will continue to rise as a function of income. This means that you're leveraging into a fairly low risk asset with good growth potential, and tax-free returns.
Plus all the intangibles, like being able to:
- Have as many pets as you want, or pets at all - Not be kicked out with a short amount of notice - Redecorate, put pictures up, improve the house as you please - No 3-monthly house inspections
I'm not saying home ownership is a panacea but it has a lot of positives over renting, both financially and otherwise.
My rent is 750€, and my mortgage would be about 1200€.
I didn't realize I could go the other way. This makes sense.
This doesn't take into account any work you have to do on the house, the notary and agency fees, and any taxes on the way.
We can also add the cost of opportunity, since you can't move easily when you have a home to get a new, get closer to your children, follow you the love you just found, discover a foreign country...
And that's in the best case scenario where:
- You found a cheap good home. - You actually end up liking leaving here. - Nothing changes to the point you have to flea the place. - No accident, no fire, no water pipe breaking, etc. - You can ensure you can comfortably pay the mortgage for three decades.
That's... a lot to consider.