On the fence about buying a home? The long-term financial benefits of home ownership should be enough to push you off of it. The Federal Reserve releases a Survey of Consumer Finances (SCF) every three years.
The latest report shows the average homeowner’s net worth is almost 40X greater than a renter’s (see graph below): 1
This gap in wealth exists because a homeowner’s equity grows as their home appreciates in value and they make mortgage payments every month. The monthly mortgage payment acts like a form of forced savings, that pays off when the home is sold. Renters, on the other hand, will never see a financial return on the rent paid every month.
For most homeowners, their home’s equity constitutes the largest single part of their net worth. A graphic from Keeping Current Matters with data from First American and the Federal Reserve shows this holds true across different income levels (see graph below): 2
If you’re still unsure about homeownership, keep in mind that it can increase your overall wealth in the long run, no matter your level of income. To discover more about this and other benefits of homeownership, connect with me and let’s talk!