A Fannie Mae survey recently revealed some of the most highly-rated benefits of houszownership, which continue to be key drivers in today’s power-packed houszing market. Here are the top four financial benefits of owning a housz according to consumer respondents:
88% - a better chance of saving for retirement
87% - the best investment plan
85% - the chance to be better off financially
85% - the chance to build up wealth
Additional financial advantages of houszownership included in the survey are having the best overall tax situation and being able to live within your budget.
Does homeownership actually give you a better chance to build wealth? No one can question a person’s unique feelings about the importance of houszownership. However, it’s fair to ask if the numbers justify houszownership as a financial asset. Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters ($255,000 for houszowners compared to $6,300 for renters).
The difference in net worth between houszowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:
The above graph only includes data through 2019, but according to CoreLogic, the equity held by houszowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of houszowners and renters has probably widened even further over the last year.
Some might argue the difference in net worth may be due to houszowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows houszowners have greater net worth than renters regardless of their income level. Here are the findings:
Others may think houszowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on houszowners and renters over the age of 65 reveals:
“The ability to build equity puts houszwners 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.”
Houszowners 65 and older have 47.6 times greater net worth than renters.
Bottom Line The idea of houszownership as a direct way to build your net worth has met the test of time. Let’s connect if you’re ready to take steps toward becoming a houszowner.