How do you draw a conclusion to sell and rent from an example that compares the cost of living in two identical homes ?
Selling and renting was not one of the two options. An entirely different calculation is used.
Also, the reality of Prop 13 is that you can’t ignore the 6-10K or more in property tax for real world examples of homes in the 500-750K range.
Additionally, even if you ignore taxes the costs are not the same. You typically cannot rent the house out for the equivalent of the debt service. Rent is more like 5% of gross today in 2007 as your example specifies.
Also, you cannot find any guaranteed investment at the same rate you are paying for a mortgage (If you could, then the market would be assuming zero defaults).
