This article and the "What your work truck says about you" article linked from it both miss an important point: taxes. Granted the author uses the example of Toronto, where I understand there isn't a mortgage interest tax deduction. In the United States though, that is the largest tax deduction available to John/Jane Doe and a significant incentive to buy a house in some tax brackets. With regard to the truck part - I guarantee more than one accountant has recommended their client buy a big truck as a tax offset.<p>I appreciate the frugal advice offered in these posts, but they feel incomplete without the inclusion of tax implications into the discussion.<p>(Disclaimer: I am not an accountant, seek professional advice.)
<a href="http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html" rel="nofollow">http://www.nytimes.com/interactive/2014/upshot/buy-rent-calc...</a><p>This calculator the NYT made is pretty good.
Article grossly overlooks an obvious advantage of <i>buy</i> option: Over almost any long enough duration, houses appreciate well in line with inflation over that period, where "long enough" is usually defined as 18+ years[1]. So you can effectively live in 2500 sq foot house absolutely <i>free</i> as long as the duration is long. It doesn't matter if you bought at the peak and sold at bottom as long as duration is long. There are sure some edge cases like Detroit or natural disasters like Katrina but overall this rule applies pretty well statistically[2]. If you were lucky enough to buy at bottom and sell at peak after 18+ years you can break a bank. But even without much luck, you will mostly break even, i.e., ~zero cost towards housing as opposed to 100s of thousands of dollars in rent checks during the same period.<p>Another strong point for "buy": If your horizon is indeed 30 years then house is <i>truely yours</i> at the end of the loan. Most people would be planning to retire after 30 years and not having to have rent expense during this period is a huge deal. You can even move out to much less expensive area and use the difference to maintain your life style. Also note that rents almost always go up over long duration. If inflation happened to kick in high gear when you retire, you will be toast because your rent would skyrocket while you are living on a fixed income.<p>The decision for rent vs buy is therefore very simple: If you think you are going to be living in given area for 18-30 years of time range, <i>buy</i> is no brainer provided that (1) your retirement savings remains same (2) you still have "rainy day" funds (3) there is reasonable income security and (4) you have recovery plan if natural disaster stricks. So those people doing long commute are not all fools and "drive until you can buy" is in fact the best strategy for them. There are some people arguing that you should buy even if you had time range as short as 5 years but then you will need to time the market and that's where most failures occur causing people to lose their life savings. Unfortunately lots of people are in this state and frankly it sucks to be in that state. You pay huge premium to be mobile and you don't know if you will ever use that mobility.<p>[1] <a href="http://www.dce.harvard.edu/professional/blog/how-use-real-estate-trends-predict-next-housing-bubble" rel="nofollow">http://www.dce.harvard.edu/professional/blog/how-use-real-es...</a><p>[2] <a href="http://www.estateofmindsites.com/subscriber_new/map.php?user_id=1&share=y" rel="nofollow">http://www.estateofmindsites.com/subscriber_new/map.php?user...</a>