HOME OWNERSHIP INCREASES NET WORTH BY A LOT

ANOTHER INTERESTING LOOK AT FAMILY NET WORTH, DEPENDING ON WHETHER THE FAMILY IS BUYING OR RENTING. BUYERS/HOMEOWNERS HAVE A BUILT IN ADVANTAGE IN THAT INCREASES IN THEIR HOUSE VALUE TRANSLATE TO INCREASED NET WORTH. INCREASES IN RENTAL PROPERTY VALUES ALSO TRANSLATE INTO INCREASED NET WORTH, BUT ONLY FOR THE LANDLORD.

Wealth-Gap-KCM2

The National Association of Realtors (NAR) recently released a report revealing that the growing wealth gap in this country has been impacted by the recent increases in real estate values coupled with the drop in homeownership rates. The report discloses:

“Over 90 percent of metro areas have experienced declining homeownership rates at a time when home values have risen and incomes have remained flat.”

For a long time home ownership has been correctly touted as a great hedge against inflation. It continues to be that, but now is also a great hedge against stagnant wages.

Increasing home values in many regions of the country have helped homeowners build housing wealth in recent years. However, the continued decline in homeownership means this increase in wealth is shared by fewer people and likely leading to worsening inequality in the U.S.

Here is a chart showing the aforementioned increasing gap between renters and homeowners in regard to family wealth:

Increasing Gap in Family Wealth | Keeping Current Matters

Bottom Line

If the experts are correct, and a homeowner really will have an average of 40 times the wealth of a renter by the end of this year, doesn’t it make sense to evaluate if a purchase could be in your future? Meet with a real estate professional in your local market to find out how you can start building your family’s wealth.

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