Mr. Wrong, you already excluded the principle from your initial cost math.
If you want to add it back in, that’s good, but compare apples to apples. Renting $2000-$2500. Owning $2800+
First, after ten years, your cumlative principle payment is only $70,555. Of, course, that increases your monthly cost back to $2800+ the downpayment after tax deductions. Total value of down and principle: $190,555 as you stated. That is, of course, plus or minus, any gain or loss in housing value.
Secondly, the Future value of the down payment plus the principle payment at 7% is $341,012. If you go to a higher rate, it climbs higher. At 8.5% return, it’s $388K. At 10%, it’s $442K. Less taxes, hopefully long term capital gain taxes. Remember, your principle payment increases a little bit each month.
Personally, I think 7% is way too low, you have bank savings accounts paying 5%. While you may think it’s high, 10% is in reality, lower than the historical return of the stock market.
In the end, you’ll make the numbers work any way you want them to. It’s garbage in, garbage out. And assumptions in reallity, are just a form of garbage.
Basically, the difference in equity growth even at a mere 7%, means to balance, the house needs to appreciate 30% over the next 10 years.
