Wealth Trajectory
Keep it, sell & rent, or move up?
sell & rent vs. keep · year 20
−$1,137,829behind if you sell & rent
By year 20: $2,478,807 keeping vs $1,340,978 if you sell & rent. Both count home equity (after appreciation and paydown) plus your investment portfolio. Rent is modeled at ~0.5%/mo of current home value (national rent-to-price ratio), inflating 3%/yr; sale proceeds (after 7% selling costs and payoff) get invested at the market return.
This isn’t a full net-worth statement; it leaves out other properties, retirement outside the balance above, and other debts. Those are the same across every path, so compare the gap between scenarios; the total on its own says little.
Keep house · yr 20
$2,478,807
home equity + investments
Sell & rent · yr 20
$1,340,978
-$1,137,829 vs keep
Move up · yr 20
$1,729,809
-$748,998 vs keep
Home value (20yr)
$1,333,549
gross value @ 4%/yr appreciation, compounded monthly
What this models:
- Mortgage amortization (interest + principal paydown each month)
- Home appreciation at your stated rate
- Investment portfolio growth + monthly contribution
- Sale proceeds (after 7% selling costs) go to investments in sell scenarios
- Move-up assumes proceeds become down payment on a bigger home (3% closing on new)
What this doesn’t model:
- Capital gains tax at sale. §121 exclusion ($250k single / $500k MFJ) covers most primary-home sales, but appreciated long-held homes or move-up sales can blow past it. Use the cap-gains calc. Also: cap-gains on the investment portfolio at exit isn’t modeled.
- Mortgage interest deduction. If you itemize, the keep / move-up scenarios get a tax benefit not credited here. Use the MID calc.
- Property taxes & insurance. Left out of every scenario, which flatters keep / move-up versus sell & rent (a renter doesn’t pay them). In move-up, property tax can spike on reassessment (CA Prop 13 reset, FL Save Our Homes loss, etc.). Can be a multi-thousand-dollar annual hit not reflected here.
- Maintenance / capex on the house (typically 1-2% of value/yr) materially understates the cost of homeownership in keep / move-up scenarios.
- Sequence-of-returns risk on investments: the model uses smooth compounding; real markets are lumpy.
- Rent growth is assumed at 3%/yr; reality varies wildly by market and period. National asking rents jumped by double digits in 2021 into early 2022, then cooled to roughly flat-to-4%/yr in 2023-2024 depending on the index.
- Closing-cost frictions on the move-up. 3% closing on the new home is modeled, but agent commission on the sale is bundled into the 7% selling cost, not credited separately.