In my last commentary, I wrote about the misleading math behind the rent vs. buy calculation. My main point was that focusing on the direct, total monthly costs of renting vs. buying misses the important fact that a significant portion of every mortgage payment goes toward the principal balance, building equity for the homeowner.
That principal payment is really a forced savings program which grows over time. And that’s a key reason why homeowners on average have much more accumulated wealth than renters.