Oh dear god. Do the "rent vs. own" calculator at CEPR. And get ready for the crash of a lifetime

I did the calculator for rent vs. own for Phoenix. I assumed a $500,000 house, 5% down, sell in 5 years, and finance with a 30 year fixed 6.5%.

Owning would cost $192,000 more than renting over those five years based on their calculations. And that assumes $3000 a month in rent! I think on a $500,000 house in Phoenix you could rent the place for $1200 or so a month. Oh dear god.

Take it for a spin and you'll see why yes, fundamentals do matter. And it's all about the P/E. It's ALWAYS about the P/E.

Costs of Ownership v. Renting:

Your basic costs start at $ 3,400 per month. However, if you can rent a similar home for less than $ 6,000 per month, you may be better off renting.

House Appreciation (real)
-52%
Purchase Price
$ 500,000
Monthly Rent
3,000
Ownership Costs
Sale Price
239,500
Outstanding Mortgage
387,300
Commission and fees
14,400
Total Cash (Owning)
-162,100
Equivalent Rental Costs
Returned Security Deposit Value
2,600
Net Savings (See details)
27,400
Total Cash (Renting)
30,000

Net Cost of Owning
192,100