Why Buying A House Makes Zero Financial Sense | ft. Ramit Sethi

TL;DR

The hosts argue that renting is often financially superior to buying, especially in high-cost-of-living cities, because buying a home is typically not more profitable than renting when all costs (interest, maintenance, transaction costs, opportunity cost) are factored in.

Key insights

• Renting can be more profitable than buying over time, especially when you factor in interest payments (more interest than principal for first 20 years), maintenance (2% of property value per year), HO
• In Manhattan, renting an equivalent place cost ~$5,000/month while owning would have been ~$11,000/month – a 2.2x premium.
• Home appreciation historically averages roughly 3-3.5% (around inflation), and recent high gains are a historical aberration driven by the pandemic.