Last week, we explored the cost of waiting a year to buy a home, and continuing to rent. Let’s take that one step further, and compare the “net worth” of the average American who owns a home versus one who rents a home.
As we all know, homeownership lost some of its allure as a financial investment over the last six years. As homeowners suffered through the housing bust, more and more began to question whether owning a home was truly a good way to build wealth. The following are some statistics extrapolated from a Federal Reserve study by Keeping Current Matters that formally answered this question.
In this study (which took place from 2007-2010), it was determined that:
- The average American family has a net worth of $77,300
- Of that net worth, 61.4% ($47,500) of it is in home equity
- A homeowner’s net worth is over thirty times greater than that of a renter
- The average homeowner has a net worth of $174,500 while the average net worth of a renter is $5,100
The bottom line is that this study by the Federal Reserve shows that owning a home is still a great way for a family to build wealth. If this isn’t compelling information about the benefit of home ownership, I don’t know what is! If you’re looking to increase your net worth through home ownership, please contact me. I’d love to help.