Homeownership Increases Your Net Worth
Think about where you want to go in a few years. You may be thinking about your career, money, seeking more stability, or upcoming ambitions. Is homeownership a component of that vision? If that is the case, you should be aware that owning a property provides several financial advantages.
One of the numerous benefits of purchasing a home is that it is an excellent method to accumulate money and achieve financial security. This is because the value of most residences rises over time, increasing your net worth. Here's how home prices are now growing. According to Zillow:
“The total value of the U.S. housing market – the sum of Zillow’s estimated value for every U.S. home – is now slightly less than $52 trillion, which is $1.1 trillion higher than the previous peak reached last June.”
In general, homeownership is a fantastic wealth-building instrument. And, with house values on the rise across the country, now could be a good time to examine whether owning a home is something you want to strive for.
Here's a look at some facts to see how much having a home may truly make a difference in your life.
Household Net Worth Is Rising
Data shows that while those in the top 1% saw the most dramatic net worth increase, people from every single tax bracket have seen their wealth grow over the past few years (see graph below):
For many of those people, the rising value of their home plays a big part in that.
Owning a Home Helps You Achieve Financial Success
You can tell homeownership had a lot to do with that growth because there’s a significant net worth gap between homeowners and renters. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“. . . homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
The main cause behind this? Homeowners build equity. The value of your property less the amount owed on your mortgage is your home equity. For most homeowners, this is the most significant contributor to their net worth. Here’s the data from First American to prove it (see graph below):
Housing is clearly a larger contributor to net worth than other assets such as equities, gold, and cryptocurrencies, as represented by the blue section of each bar. As you can see, homeownership contributes more to the typical household's wealth than anything else, regardless of income level.
One of the most significant advantages of having a property is that it may increase your net worth. Let's get in touch so you can begin investing in homeownership.