[Don Plumley]

Wayne, I'd like you to consider one factor that does not always show up on a spreadsheet -- we didn't buy a home purely for financial reasons - you also buy a home because it's where you want to live and how you want to live.

If you want to focus only on the short term RE concern, then yes, buying now and selling in three years carries risk. But buying now and selling in 20 years IMHO carries negligible risk. In that span of time, you have leverage working to your benefit. The 20% down ($70K) is controlling a $350K investment. We can debate historical risk-adjusted returns till the cows come home. And I'm sure you know that market timers typically do not show investment returns of steady investors - this applies to stocks and real estate.

Back to the emotional reasons for home ownership. It's your home, not someone else's property. That means as long as you make the payments, you get to live there. That's not true of rent. Leases end. Rental properties are sold. Families generally desire the continuity and stability of living in a community, in a neighborhood. If the lease is not renewed, you have risk of changing schools, different neighbors, etc. While you can paint walls and change carpets, you won't make the kind of semi-permanent infrastructure improvements on a rental home. Like nice garage cabinets, 220V for your welder, built-in bookcases for your living room. In other words, whenever you think of improving your surroundings, you are confronted with the fact that it's not your home.

When we relocated to Northern California two years ago, I wanted to rent a house because I was concerned about the real estate market and thought there might be short term job risk. But in the relocation, my family needed the stability that only home ownership can provide. That benefit was priceless. (And the 45% odd increase in property value does not hurt either)

So I think your math should include a time horizon to show the true net effects (appreciation or depreciation, etc.) plus a valuation factor for the personal benefit of home ownership. Call it factor X and let each assign their own "peace of mind" value. For some, it might be $100 per month, for others, it might be $10,000. It is for me.