Other financial advantages of owning a home included in the survey are the potential for having the best overall tax situation and being able to live within your budget.
Does being a homeowner give you more of a chance to build wealth?
It’s important to question if the numbers justify homeownership as a financial asset. Last fall, the Federal Reserve published the Survey of Consumer Finances, which is done every three years. The latest edition is covered through 2019. They found that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters.
There is a large difference in net worth between homeowners and renters, which has continued to grow over the years. Below is a graph of the results from the last four Fed surveys:
CoreLogic says the equity held by homeowners grew by $26,300 over the last twelve months alone. Which means the gap between the net worth of homeowners and renter has likely widened even more over the last year.
Others might state that the difference in net worth is because of homeowners having a larger income than renters, giving them the ability to save more money. A study by First American shows homeowners have greater net worth than renters regardless of their income level. Below are their findings:
Many also believe that since most homeowners are older, that is why they have more net worth. However, a Joint Center for Housing Studies by Harvard University on homeowners and renters over the age of 65 states:
“The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700”
Homeowners 65 and older have 47.6 times greater net worth than renters.
It’s hard to build net worth while renting. This isn’t just because homeowners have a higher income level. Not only does homeownership help you grow your net worth, but there are also a ton of other great benefits. If you want to grow your net worth by becoming a homeowner, connect with our team today to get started on your homebuying journey.