“Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.”
The link between financial security and homeownership is especially important today as inflation rises. But many people may not realize just how much owning a home contributes to your overall net worth. As Leslie Rouda Smith, President of the National Association of Realtors (NAR), says:
“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”
Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.
Owning a Home Is a Building Block for Financial Success
“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”
To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):
The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.
Equity Gains Can Substantially Boost a Homeowner’s Net Worth
The net worth gap between owners and renters exists in large part because homeowners build equity. As a homeowner, your equity grows as your home appreciates in value and you make your mortgage payments each month.
In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. As a renter, you’ll never see a return on the money you pay out in rent every month.
To sum it up, NAR says it simply:
“Homeownership has always been an important way to build wealth.”
The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, let’s connect today.
To view original article, visit Keeping Current Matters.
Today, there’s still a shortage of inventory, which is causing ongoing home price appreciation.
In addition to building your overall net worth, equity can also help you achieve other goals like buying your next home.
Your house is also an asset that typically increases in value over time, even during inflation.
Your goal is to aim directly for the center – not too high, not too low, but right at market value.
Home prices are forecast to keep appreciating because there are still fewer homes for sale than there are buyers in the market.
The first step is working with a local real estate advisor who can help you find a home in your desired location.