Buying a home in a tolerable location costs at least 200k in my area and upkeep isn't free either. I can rent an apartment in a much better area for fifteen to twenty years for just the initial investment.
A house can easily lose its value or at least cause large expenses, e.g. if the cellar floods or develops mold problems. Or if the surrounding neighborhood becomes worse.
Selling houses has a large transaction cost.
I really don't see much benefits to owning over renting. I'd rather have 200k in a diversified portfolio that earns me 5k a year after taxes and has a much lower probability of losing 30% of its value while living in an apartment in a central location than own a house in a suburb that costs me a few thousand a year in upkeep and taxes. I'd likely need to buy a car too in that case, which is another few thousand a year.
I think the economic tradeoffs in buying a house are pretty country specific. For example, renters in Germany have very strong legal protection. It is very difficult for your landlord to kick you out, or raise the rent dramatically. I could certainly afford to buy the flat I live in, but I prefer to have the money invested in the stock market instead, and have someone to call (who also pays for) any problems. I also lived in rented apartments in France and UK, and it felt significantly different: Limited-term contracts, poor maintenance, (poorly) furnished - I would not want to live that way forever (of course, I choose these contracts because I only intended to stay for a limited time).
Interestingly, in Poland, it's the renter who is responsible for taking care of all problems, except structural ones and perhaps stuff like mold. Everything else is on the renter, and he is expected to return the house in "no worse" condition on the lease's end - meaning, repairing all the white goods in the house if they break etc.
Germany takes care of that problem by not supplying a kitchen or any white goods at all when renting an apartment. Of course, exceptions apply and some landlords do offer an EBK (fitted kitchen) when renting.
Shouldn't you also factor rent into your calculations? I don't know how high it is on 200k property, but I assume it's significantly higher than 5k/year. Owning a house is risky for the reasons you've mentioned, but might give you higher returns.
Like I said, owning isn’t for everyone (my point is only that it’s not an extraordinarily risky investment contrary to the OP’s claim). 5k a year isn’t rent in most places.
A house can easily lose its value or at least cause large expenses, e.g. if the cellar floods or develops mold problems. Or if the surrounding neighborhood becomes worse.
Selling houses has a large transaction cost.
I really don't see much benefits to owning over renting. I'd rather have 200k in a diversified portfolio that earns me 5k a year after taxes and has a much lower probability of losing 30% of its value while living in an apartment in a central location than own a house in a suburb that costs me a few thousand a year in upkeep and taxes. I'd likely need to buy a car too in that case, which is another few thousand a year.