I mean…yeah? You’re charmed, in that it sounds like you have had the sort of preferences that map well onto large professionally managed rental properties. Not everyone does. If you want to live in a single family detached home (as many people with kids do), or want to have certain kinds of pets, or need a larger than typical unit, or want (or need) to live in certain neighborhoods, or want eclectic or unusual types of fixtures or features of a unit…well, you’re probably not going to find that in a large professionally managed rental property. You’re probably going to have to rent from a mom & pop landlord, if you can find a rental at all, which brings with it the insecurity of possibly having to vacate.
I mean, that’s just the power of compounding - nothing magical about renting vs. buying. To use your example above, if one had stuck $9K in an S&P 500 index fund 40 years ago, they’d have $650K today - but that’s true no matter where the $9K came from. Whether it’s foregoing your graduation trip to Europe, not buying a new car in your youth, giving up eating out for a year…or not buying a harpsichord when you’re young. If you spend any money at all above and beyond necessities as a young person, you’re throwing away a fortune in your older age.
But sometimes, you spend money on things because it makes your life better. Honestly, getting to live in the part of town you want, living in the type of place you want, being able to make your home the way you want it without having to ask a landlord’s permission - seems kind of worth spending a little money early in your life to get those things. But diff’rent strokes, as it were.
One question for you, though - why do you suppose landlords own these units that they’re renting to you? How do the numbers work out for them? If they’re charging low enough rent that you’re getting a great deal by leasing from them and putting your money in the S&P (rather than buying the equivalent unit on the market), how can it make sense for them to own their building rather than putting their money in the S&P instead? If they sold their unit and put the proceeds in an index fund, they’d be earning vastly more return (given the market conditions you describe) - even in a very short time frame. How does that market end up in that equilibrium?