I have this impression that it’s seen as a riskier decision to buy a home, knowing you won’t live in it long enough to pay off the mortgage and then sell it when you’re ready to move away, when compared to renting a home. Am I off base on that, and if so, why is this the case?
In: Economics
It is a leveraged investment. If you pay 20% (e.g. $100k of a $500k purchase) deposit those savings will take the first losses. If property prices decline 20% you have not lost 20% of your investment, you’ve lost 100%. It works in the other direction also. If the house doubles in value your gain is 500% (less mortgage payments.) Owning a house for a long period insulates you from the risk of a short term dip.
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