Homeownership is Crucial to Accumulating Wealth

Monday, March 28, 2022   /   by Raj Jaggi

Homeownership is Crucial to Accumulating Wealth

Can policymakers reverse the unequal decline in middle-age U.S.  homeownership rates? - Equitable Growth
With inflation on the rise, the link between financial stability and homeownership is more vital than ever. However, many individuals are unaware of how much owning a property adds to your entire net worth. As President of the National Association of Realtors (NAR) Leslie Rouda Smith puts it:

“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.”

Here are some of the reasons why homeownership is a great objective to pursue if you want to improve your financial stability.

Having a Home is a Necessary Part of Financial Success

Several homeownership trends and statistics, including the gap in net worth between homeowners and renters, are detailed in a recent NAR report. It discovers:

“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”

Equity Gains can Significantly Increase a Homeowner's Net Worth

The difference in net worth between homeowners and renters is mostly due to the fact that homeowners accumulate equity. As a homeowner, your equity builds as the value of your property rises and you make your monthly mortgage payments.

To put it another way, when you buy a home, your mortgage payment serves as a contribution to a forced savings account. And any equity you've built up is returned to you when you sell. You will never see a return on the money you pay in rent each month as a tenant.

To put it in simple terms, NAR says:

“Homeownership has always been an important way to build wealth.”


The disparity between a homeowner's and a renter's net worth demonstrates how important homeownership is to wealth accumulation. Talk to a trusted real estate advisor today if you're ready to begin your journey to homeownership.

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