Growing Your Net Worth with Homeownership
Take a moment to imagine where you want to be in a few years. You might be thinking about your job, money, wanting more stability, or goals you want to reach soon. Is homeownership a part of that vision? If it is, you should know owning a home has a whole lot of financial benefits.
One of the many reasons to buy a home is that it’s a great way to build wealth and gain financial stability. That’s because the value of most homes increases over time, which in turn grows your net worth. Here’s how home values are rising right now. 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.”
Basically, homeownership is a tremendous wealth-building tool. And with home values back on the rise across the nation, now might be a good time to consider if owning a home is something you want to reach for.
Here’s a look at some data to see how much owning a home can really make a difference in your life.
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.
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 big reason why? Homeowner’s build equity. Home equity is the value of your home minus the amount you owe on your mortgage. And for most homeowners, that’s the largest contributor to their net worth. Here’s the data from First American to prove it (see graph below):
The blue portion of each bar represents housing as a portion of net worth – and it’s clearly a bigger contributor than other investments like stocks, gold, and cryptocurrencies. As you can see, across different income levels, homeownership does more to build the average household’s wealth than anything else.
One of the biggest benefits of owning a home is that it can provide an avenue to grow your net worth. Let’s connect so you can start investing in homeownership.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. The Home Run Team, Ltd. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. The Home Run Team, Ltd. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.
There's a myth about down payments that hold a lot of buyers back; here's what to know to not get fooled.
Let’s take a look at some historical data to show what’s happened in the housing market during each recession, going all the way back to the 1980s.
Right now, it's a tale of two markets, and knowing which one you’re in makes a huge difference when you move.
Just because the economies down doesn't mean home prices will follow; in fact, it may be the opposite.
If you put the latest data into context, it’s clear there’s no reason to think this is a repeat of the last housing crash.
Here’s the thing: the market’s shifting. And it might be time to hit play again.
If you put your home search on hold because you couldn't find anything you liked in your budget, it's time to try again.
Savvy sellers are jumping off the fence and back into the market. And here’s why.
Here’s what most buyers don’t always think about: the longer you wait, the more buying could cost you.
We're here to help people live wealthier lives and enjoy more freedom by educating and guiding them through their lifelong real estate journey. Whether you're buying a home, looking to sell or relocate, or are an investor, we can help you. No agents will work harder for you, because to us, going to bat for you, isn't work. That's just what you do when you're a team.