Renting vs. Buying a Home: What People Get Wrong

People tend to assume that homes are great investments - they’re not, that mortgages are a wealth building hack - they help, but as much as some people think, that paying off a mortgage lowers your housing costs - it actually raises them, and that owning a home makes people happy - it might, but don’t count on it.
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*PWL Rent vs. Buy Calculator*
https://research-tools.pwlcapital.com/research/rent-vs-buy

*Sample Case from the Video*
https://research-tools.pwlcapital.com/research/rent-vs-buy?isPortfolioTaxable=false&timeHorizon=50&province=ON&incomeInit=50000&purchasePrice=512300&downPaymentPct=20&ammortization=25&interestRate=5&propertyTaxRate=1&maintenanceCostPct=1&realEstateGrowthRate=3.5&homeInsuranceMonthlyInit=100&rentInsuranceMonthlyInit=40&rentInit=2119&assetAllocation=100&inflation=2.5&elgDividends=0.91&foreignDividends=0.9899999999999999&unrealizedGains=4.61&realizedGains=0.51&income=0&fwtRate=15

*Maintenance Costs*
-Mayer, in a response to Smith and Smith (2006), suggests a range of 2–3% for maintenance and capital expenditure. https://www.brookings.edu/wp-content/uploads/2006/03/2006a_bpea_smith.pdf
-Harding, Rosenthal, and Sirmans (2007) find that U.S. housing depreciates at roughly 2.5% per year gross of maintenance spending, and 2% per year net. https://doi.org/10.1016/j.jue.2006.07.007
-Bokhari and Geltner (2016) find an overall average net of maintenance depreciation rate of 1.5% per year net of maintenance. https://doi.org/10.1111/1540-6229.12156
-In National Accounts data, Statistics Canada reports average maintenance and repair costs over our sample period of 0.82% as a proportion of net residential housing stock, and renovation spending of 2.48%.
-For calculating the Consumer Price Index, Statistics Canada uses 1.5% of the building value for homeowners' replacement cost (depreciation). Homeowners' replacement cost comprises 24.85% of the owned accommodation item in the CPI, while homeowners' maintenance and repairs comprise 9.97%, or 0.60% of the building value. Together, this suggests depreciation and maintenance costs of 2.1% of the building value.

*The Psychology of Home Ownership*
Video: https://youtu.be/0G_OSohLC_A?si=5mWx4KanW7HzM57T
References: https://zbib.org/dfc892f743e14459bea621fd9fbba1fa
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