Homeowner’s Net Worth Is 45x Greater Than Renter’s

Thearrow with choose buy or rent written on the blackboard with chalk

As we wrap up a positive year and head into a more uncertain one, this is the final thought that I want to leave you with in 2016: the average net worth of a homeowner is forty five times greater that the net worth of a renter. This fact should be instructive for anyone thinking about ways to secure your financial future.

Every three years, the Federal Reserve conducts a Survey of Consumer Finances inhich they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

In a Forbesarticle, the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that by the end of 2016, the net worth gap will widen even further to 45 times greater.

The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction:

Homeowner’s Net Worth Is 45x Greater Than a Renter’s | MyKCM

As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth.

The latestNational Housing Pulse Survey from NAR reveals that 85% of consumers believe that purchasing a home is a good financial decision. Yun comments:

“Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”

What does this mean?

If you are interested in finding out if you could put your housing cost to work for you by purchasing a home, let’s get together and evaluate your ability to buy today!

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