re: “You’re just throwing your money away on rent”

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His note would be less than his current rent and he earns equity.

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How much is he putting down? What is the int rate? Does the note include escrow? What's the payment difference vs rent? What does his savings look like after making down payment?

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Now he can afford to pay down his student loans faster too.

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Sure, as long as the AC doesn't blow up or he doesn't get hit with a 10,000 assessment from the HOA.

Sure you'd get something but it'd be much less than if you'd invested elsewhere.

After your transaction costs of $20,000+, you also forgot to include the annual costs of maintenance, property taxes and insurance for every year you owned the home in your analysis. You conveniently left out the time period over which your property "appreciated", so no real conclusion can be reached.

Assuming 2% per year for ownership costs, plus $20,000 for sales costs, over 5 years you're at an average annual return of about 1.25% and over 10 years you're losing money every year. Obviously there is the value of imputed rent (being able to live there) but a house is generally a bad investment. A house is an undiversified, illiquid leveraged investment, they're good for living in but not for storing wealth.

Also, you didn't bring up the scenario where your house is worth $240,000 at sale and you have to a write a check for $80,000 on top of all these costs.

You can get diversified, liquid returns that average 11-12% without the volatility and high transaction costs of housing. Obviously you can't live in a mutual fund, but you can sell some of them to rent really nice houses, while your money grows too.

We put down 5% on our house and are locked in at 4% interest and it may go down right before closing. So them not having much to put down is not a factor if they can hit that 5% probably. Interest rates are so low that it doesn’t currently make sense to give away all your cash.

For me, owning a home everywhere I’ve lived has paid off quite well.

Everybody is different though.

My advice would be to educate yourself as much as possible on your local markets, mortgage industry, etc. and go from there.

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The idea that your primary residence is an investment is BS. In order to make money off your primary residence, you have to be able to cash out or change the situation (move to place with a lower housing cost). You can’t trade apples for apples in the same city since everyone else’s properties are subject to the same market forces as yours.

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I'd like to think of my primary residence is a long-term investment.

We are buying (close next week) in an area primarily because of good schools. 15-year mortgage. Once our kid is out of school and hopefully off to college out of the house we'll have completely paid off our house, and we'll have much more room than necessary for just my wife and me.

So, we can downsize into a more central location, and then turn the primary residence into a rental income with no mortgage to worry about, just taxes.

In the more current situation, our mortgage all combined is going to be about $700/month less than our current rent. So that's nice.

I remember this argument too, but being a homeowner, the biggest thing I miss about renting is not having to spend every weekend fixing all the crap that breaks during the week.

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I suggested they rent and keep saving until there’s another dip in the market.

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In Nashville? Keep waiting.

Dirty little secret, with a small down payment you are essentially “renting from the bank” for years, but on the hook for upkeep/repairs out of pocket.
Look at a 30 amortization schedule/calculator to see this for yourself. Any significant repair/costs will negate the meager equity accrual, not to mention escrow costs.
If it is the home(and a commitment) for 30 years that is one thing, but a “starter” situation? Renting is a well justified decision

When my central AC unit went out I was thanking God that I rent...