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Homeowner Net Worth Has Skyrocketed

If you’re weighing your options to decide whether it makes more sense to rent or buy a home today, here’s one key data point that could help you feel more confident in making your decision. Every three years, the Federal Reserve Board releases the Survey of Consumer Finances (SCF). That report covers the difference in net worth for both homeowners and renters. Spoiler alert: the gap between the two is significant.

The average homeowner’s net worth is almost 40X greater than a renter’s. And here’s the data to prove it (see graph below):

The Significant Impact of Homeownership on Net Worth

The most recent report on homeowner and renter net worth has revealed a stark contrast. Homeowners now boast an average net worth of approximately $255,000, whereas renters lag behind at an average of $6,300. This year's updated findings have further widened this gap, marking a substantial surge in homeowner net worth, as per the Survey of Consumer Finances (SCF) report. It's noted that the growth in median net worth between 2019 and 2022 stands as the most significant increase recorded in the modern history of the SCF, more than twice the size of any previous surge.

The primary driver behind the remarkable surge in homeowner net worth is attributed to home equity.

Dubbed as the 'unicorn' years for housing, recent times witnessed a soaring trajectory in home prices. The scarcity of available homes for sale combined with a surge in buyers capitalizing on historically low mortgage rates led to an imbalance in supply and demand, resulting in a continuous escalation of property prices. Consequently, most homeowners who owned a home during this period witnessed a significant surge in their equity.

For those contemplating the decision of renting versus buying, it might appear as though the window for substantial net worth growth has closed. However, a recent article in The Ascent points out an important perspective:

"Regardless of whether your net worth has recently increased, there are steps you can take to bolster that figure in the upcoming years... purchasing a home can significantly contribute to growing your net worth, given the tendency of home values to appreciate over time."

Traditionally, home prices have shown an upward trajectory over time. Despite mortgage rates inching closer to 7-8%, property prices continue to rise in various regions due to the persistent imbalance in supply and demand. Expert projections for the future indicate a sustained but more typical pace of appreciation in the housing market.

Although the meteoric rise seen in recent years might not be replicated, individuals purchasing homes at present can anticipate continued equity growth in the foreseeable future. Consequently, those ready and capable of investing in a home today are poised to make an investment that will substantially contribute to their net worth in the long run.

Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), emphasizes the importance of considering the total cost of homeownership against the total financial benefit when deliberating between renting and buying. New data from the Federal Reserve highlights a median net worth of homeowners at $396,200 compared to renters at $10,400. The wealth gains provided by homeownership are unequivocal.

For those contemplating the choice between renting and buying a home, it's crucial to recognize that homeownership significantly contributes to long-term net worth. For further insights into this and the myriad other advantages of owning a home, seeking guidance from a local real estate agent is highly recommended.


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