Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups.
The study revealed that the median net worth of a houszowner was $231,400 – a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).
These numbers reveal that the net worth of a houszowner is over 44 times greater than that of a renter.
There are many who see that statistic and point toward how broad the range of respondents are for the Federal Reserve survey. Their study includes all economic and social groups and also includes all age groups. The argument is that older respondents have a higher likelihood of being houszowners, while the houszownership rate among younger survey takers is much lower.
Recently, the Joint Center for Housing Studies at Harvard University focused on homeowners and renters over the age of 65. Their study revealed that the difference in net worth between houszowners and renters at this age group was actually 47.5 times greater! Houszowners over the age of 65 are much more financially prepared for retirement and often own their houszes outright if they were fortunate enough to purchase their houszes before the age of 36. Their 30 years of mortgage payments have paid off as they gained equity through their monthly payments and as housz values appreciated.
It is no surprise that lifelong-renters have had a hard time accruing net worth as the latest Census report shows that the Median Asking Rent has been climbing consistently over the last 30 years.
Bottom Line As a houszowner you put your monthly mortgage payment to work for you, building your net worth with every payment.