Most Replayed Moment: Is Renting Keeping You Poor? What's The Actual Cost Of Home Ownership? David Bach

Building my first business in my early twenties, I had serious imposter syndrome around finance. I’d avoid it, even though knowing your numbers is what lets a small business chase its dreams. So I’m pushing back on a recurring claim here: is owning a home really a bad investment?

I couldn’t disagree more. For ordinary people, wealth has largely accumulated through stocks and home equity. Yes, getting a foothold is brutally difficult now, especially in major cities, but renting does not make property costs disappear; landlords price taxes, insurance, and repairs into the rent.

But that correlation doesn’t prove the house itself made somebody wealthy. And if prices, upkeep, property tax, insurance, and selling costs are counted, critics say inflation-adjusted gains can look close to nothing. Are you talking headline appreciation or the return after everything?

Those calculations miss how people actually buy. You usually put down a fraction and borrow the rest, so price gains work on the whole property, not just your deposit. I started with twelve thousand dollars of card debt, bought a fixer-upper with my friend Andrew, and rented rooms because we had to scrape the mortgage together.

What if I put a twenty-thousand-dollar deposit into the S and P 500 instead? Couldn’t that eventually beat the equity in the house?

You can’t sleep in an index fund. A five-thousand-dollar monthly rent becomes six hundred thousand over ten years before increases, and somebody is benefiting from that deal. Renting can be sensible for a stretch, but I don’t see it as the long-term engine of wealth people pretend it is.

There’s still mobility. My son, and people entering an AI-shaped job market, might need to move from San Francisco to Florence or somewhere else. Doesn’t ownership make it harder to follow the next opportunity?

Possibly, but leases tie you down too. In many American markets, a home can sell within a few months, or you can rent it out and move. My point isn’t that everybody must own forever; it’s that you need a plan to pay yourself first. A mortgage can impose saving, and biweekly payments can shorten the debt considerably.

What you just heard was a most-replayed moment from an earlier episode. The full conversation is linked below.