Even if he suffered a loss (i.e. if the appreciation in the home value was not enough to offset his accumulated outflow of principal and interest) it probably would not be as much as he would have lost by renting.
Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying and (2) he could have invested the difference in some other asset that had a much higher return than appreciation of the condo.
If the amount the rental amount is about the same amount as the mortage payments then you are almost certainly going to be worse off renting than buying under average market conditions.
> Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying
Of course he could. If your rent is paying your landlord's mortgage, you're overpaying.
> and (2) he could have invested the difference in some other asset that had a much higher return than appreciation of the condo.
Finding an asset with a better than 1% return is not difficult.
> If the amount the rental amount is about the same amount as the mortage payments then you are almost certainly going to be worse off renting than buying under average market conditions.
If you're wasting your money by paying your landlord's mortgage, you're going to be worse off than if you refuse to waste money and pay a reasonable rent. Renting is cheaper than home ownership; if it's not, you're doing it wrong.
I'm renting and probably paying the landlord's mortgage. But I know that I will live here a specific period of time and then move. So by renting, I'm buying peace of mind: I don't have to sell a house or worry about getting stuck with it, and I don't have to add a mortgage to my other debt.
When I'm going to be somewhere long-term, or at least have a flexible schedule for moving away, I'll want to buy.
On the "If your rent is paying your landlord's mortgage, you're overpaying" point: sadly, not every market is equal.
Over here (Uruguay), rents are way more expensive than an equivalent mortgage... simply put, people (myself included) don't have capital for the down payment (and the mortgage process is expensive in itself, at least U$D 1000 which is not a small sum here), so they don't have an option - it's renting, or the street/slums.
The only caveat is if you are somewhere long enough, rents will continue to increase while your fixed rate mortgage will remain constant (taxes and upkeep, of course, may not). I've looked at the costs of short term renting vs. buying in my market, and for the kind of properties I look at, it's significantly more expensive to buy in, say, the 2 year time frame.
This is probably generally true, provided that you reside in the property long enough to recoup the rather high transaction costs. I did the math on purchasing recently and given how long I expect to be in my current area, the math doesn't add up, even assuming relatively low upkeep costs.
I'm not sure how long you have to stay somewhere to hit the break even point.
Your scenario assumes that (1) he could rent the same or an equivalent property for much less of cash outflow than buying and (2) he could have invested the difference in some other asset that had a much higher return than appreciation of the condo.
If the amount the rental amount is about the same amount as the mortage payments then you are almost certainly going to be worse off renting than buying under average market conditions.