Wealth Unleashed: The Powerful Impact of Homeownership on Net Worth

If you're trying to decide whether to rent or buy a home this year, here's a powerful insight that could give you the clarity and confidence you need to make your decision.

Every three years, the Federal Reserve releases the Survey of Consumer Finances (SCF), which compares net worth for homeowners and renters. The latest report shows the average homeowner’s net worth is almost 40X greater than a renter’s (see graph below):

One reason a wealth gap exists between renters and homeowners is because when you’re a homeowner, your equity grows as your home appreciates in value and you make your mortgage payment each month. When you own a home, your monthly mortgage payment acts like a form of forced savings, which eventually pays off when you decide to sell. As a renter, you’ll never see a financial return on the money you pay out in rent every month. Ksenia Potapov, Economist at First Americanexplains it like this:

“Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments . . .”

The Largest Part of Most Homeowner Net Worth Is Their Equity

Home equity does more to build the average household’s wealth than anything else. According to data from First American and the Federal Reserve, this holds true across different income levels (see graph below):

The blue segment in each bar represents how much of a homeowner's net worth comes from their home equity. Based on this data, it's clear no matter what your income level is, owning a home can really boost your wealth. Nicole Bachaud, Senior Economist at Zillowshares:

“The biggest asset most people are ever going to own is a home. Homeownership is really that financial key that helps unlock stability and wealth preservation across generations.”

If you’re ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with mortgage rates trending lower lately, your purchasing power may be higher now than it has been in months. And, with more inventory coming to the market, there are more options for you to consider. A local real estate agent can walk you through the opportunities you have today and guide you through the process of finding your ideal home.

Bottom Line

If you're unsure about whether to rent or buy a home, keep in mind that owning a home can increase your overall wealth in the long run, no matter your income. To discover more about this and the many other benefits of homeownership, let’s connect.

1213 Properties
Page 1 of 102
Open 6/30
13045 Steinhatchee LOOP Venice,  FL 34293
$889,000
Neighborhood: Grand Palm Ph 2A D 2A E
3
Beds
2F11/2
Baths
2,427
Sq.Ft.
2020
Year Built
2
Days on Site
N6133491
MLS
$543,000
Neighborhood: Hidden Lakes
3
Beds
2
Baths
2,044
Sq.Ft.
1997
Year Built
2
Days on Site
N6133423
MLS
$730,000
Neighborhood: Venetia Ph 2
3
Beds
3
Baths
2,206
Sq.Ft.
2004
Year Built
2
Days on Site
N6133289
MLS
$495,000
Neighborhood: South Venice
3
Beds
2
Baths
1,530
Sq.Ft.
2024
Year Built
2
Days on Site
A4614986
MLS
$409,000
Neighborhood: Pelican Pointe Golf & Country Club
2
Beds
2
Baths
1,402
Sq.Ft.
2000
Year Built
2
Days on Site
A4600650
MLS
$2,200,000
Neighborhood: Not Applicable
6
Beds
4
Baths
4,000
Sq.Ft.
1970
Year Built
2
Days on Site
N6133531
MLS
$394,900
Neighborhood: Ventura Village
2
Beds
2
Baths
1,522
Sq.Ft.
2014
Year Built
2
Days on Site
N6130677
MLS
$128,000
Neighborhood: Japanese Gardens Mhp
2
Beds
1F11/2
Baths
683
Sq.Ft.
1970
Year Built
2
Days on Site
N6133554
MLS
$448,000
Neighborhood: Pinebrook South
3
Beds
2
Baths
1,601
Sq.Ft.
1979
Year Built
2
Days on Site
N6133498
MLS
$318,000
Neighborhood: Gardens 3 At Waterside Village
2
Beds
2
Baths
1,261
Sq.Ft.
1998
Year Built
2
Days on Site
N6133510
MLS
$394,500
Neighborhood: Venetia Ph 5
2
Beds
2
Baths
1,385
Sq.Ft.
2004
Year Built
2
Days on Site
N6133403
MLS
$750,000
Neighborhood: Gran Paradiso Ph 1
4
Beds
2F11/2
Baths
2,668
Sq.Ft.
2015
Year Built
2
Days on Site
N6133553
MLS

Post a Comment