Owning a Home Can Help You Build Wealth
You may have heard that it is better to rent than to buy a home right now. Even today, there are numerous compelling reasons to become a homeowner. One of them is that having a home is often regarded as a solid long-term investment that contributes to the growth of your net worth over time.
Homeownership Builds Wealth Regardless of Income Level
You may be surprised to learn that homeowners across various income levels have a much higher net worth than renters who make the same amount. Data from First American helps illustrate this point (see graph below):
What makes wealth so much higher for homeowners? A recent article from Realtor.com says:
“Homeownership has long been tied to building wealth—and for good reason. Instead of throwing rent money out the window each month, owning a home allows you to build home equity. And over time, equity can turn your mortgage debt into a sizeable asset.”
Basically, the wealth you accumulate when you own a home has a lot to do with equity. As a homeowner, equity is built up as you pay down your loan and as home prices appreciate over time. Mark Fleming, Chief Economist at First American, explains how this same benefit isn’t true for renters in a recent podcast:
“Renters as non-homeowners gain no wealth benefit as home prices rise. That wealth actually accrues to the landlord.”
Before you sign another rental agreement, you should consider whether it would be better for you to buy a property instead. The best approach to determining what is best for you is to speak with a real estate specialist you trust. That professional can walk you through the advantages of owning to help you decide if it's the best next move for you.
If you're unsure whether to remain renting or buy a home, know that having a property, regardless of your income, can help you develop wealth. Let's get started on the path to homeownership right away.