If the 4.5% interest rate is not the fixed rate of the loan then the payment represents something in between owning the home and renting it. They own the right to profit (or lose) on the resale, but they aren’t any closer to owning the asset itself than if they were renting. The tax break is about the same regardless; it’s just built into the rental rate as opposed to being separate from a mortgage payment.
The downpayment is investment capital from an investment standpoint, and at whatever point the the property isn’t appreciating faster than the rate of inflation then that investment is losing money. The investment may still be ahead, but if its currently bleeding then there are alternate investments that make better economic sense.
As for the “security” of home ownership, I think it’s somewhat overrated.
I think people sometimes project their own problems onto their kids; they feel a little displaced so they search for solutions to prevent their kids from going through that. It’s an admirable motive, but a kid doesn’t feel a relocation until they’re in school and they start to branch out from their household. Really, I think the potential for damage to a kid is a lot higher when both parents have to work obscene hours in an effort to maintain a lifestyle.
I doubt most family renters are compelled to move every 2 years unless they want to for some reason; nor do I think it’s that difficult to find similar homes in the same school area if they’re so concerned about their kids maintaining the same relationships for 7 years at a time. Trust me, by the time kids get into high school their circle of friends are generally different that what they start out with in middle school, and it extends a lot farther than their block. I would never worry about the kids – they don’t start having problems until you start changing schools at other than the start of middle school or high school.
A 2002 sales price is probably a pretty safe bet. It may not be completely “protected” from loss, but neither is it double – let alone triple – the stabilized value at the long term trendline.
