According to a recent Fannie Mae survey, these were the most highly-rated benefits of homeownership that inspired 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

Respondents also cited that other benefits include having a better overall tax situation and being able to live within a budget.

Still, others may ask, Does homeownership actually give you a better chance to build wealth?

 

While each person’s / family’s unique feelings about the importance of homeownership will inevitably vary, it is fair to ask if the numbers justify owning a home as a financial asset.

In a (done every 3 years) Federal Reserve Survey of Consumer Finances – the latest edition covering through 2019 – 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 homeowners compared to $6,300 for renters).

The graph below only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. So, the gap between the net worth of homeowners and renters has probably widened even further over the last year.

It might be argued that the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level, as seen in the graphic below.

Others may think homeowners are older and that’s why they have a greater net worth. However, a Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 revealed the following:

“The ability to build equity puts homeowners 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.”

Homeowners 65 and older have 47.6 times greater net worth than renters.

The idea of homeownership as a direct way to build net worth has met the test of time. Now may be just the right time to take steps toward becoming a homeowner.