My point wasn't that I would have $500,000 to live off but that I wouldn't have to pay $????.?? a month in rent (this number rises with the housing market but seems to be much slower to drop when the housing market does). I will have about $2,000.00 a month more in disposable income once she is paid off.
I may also be able to downsize if I choose - I doubt I will because I love my pad and hate moving - but I could freeing up some cash. Or, I could rent it out whilst I rent a pad in warmer climes, or I could borrow cheap cash against it if I want to purchase commercial property or a business (I've actually already done this)
Remember that if that 500k was making 5%, you'd have just under 2000/month after taxes to rent wherever you wanted and no realtor fees to pay if you do decide to downsize.
I realize that home ownership makes sense for a lot of people that want stability and need a forced savings program so I'm not going to argue that renting is the best for everyone in all situations. But what I see ALL the time is young people that want to do the right thing with their money and are convinced by their parents/friends that housing is the only way to go, and that's just not true. Buy the right condo and you put 500 a month toward equity. Great. After 5 years, you've paid 30 grand off the mortgage. Rent, put the difference away, and after 5 years, you still have that 30,000, but you don't have to pay a 20,000 commission to get your hands on your money. A lot can change in 5 years if you're twentysomething, and there's an excellent chance that at the end of those years, the 700 sqft 1 bed you bought won't be such a good fit for your wife, girlfriend, new job, baby, or Great Dane.
People talk about having a house paid off in 25 years, but how can they be sure that they're going to be in the same place for longer than they've even been alive? And if they're not, how will they feel when they see their "gains" are wiped out by Realtor fees?
If you can afford it and are SURE you're staying put for 5 years or more, owning a home can be a rewarding experience, and when you move, you'll probably have some money to show for it. But it's not your only option. Being a saver is sexy too, and if you can stick with it and not blow all your money on ipads, rims, and trips to Cancun, you'll be further ahead at the end of those 5 years when you have a better idea of what the hell you're going to do with your life.
Start with 200 bucks a month. Put it in the bank. Make it an automatic payment. Don't touch it. Increase payments when you think you can. If you stick with it, you're way ahead of anyone who buys a condo in Vancouver with 5% down in the next few years.