Though homeowner equity is closely tied to house values and real estate market fluctuation, homeowners’ net worth still dwarfed that of renters even following the housing crash, when home prices plummeted. In fact, homeowner net worth was 34 times greater than that of typical renter’s in 2010, despite the housing market’s struggles.
Home Ownership Boosts Net Worth
Real estate, it's tangible, an asset, a possession with intrinsic and fundamental value. Studies have shown home owners enjoy a much greater net worth over renters on average.
There are numerous benefits to owning your own home, and according the the Federal Reserve Survey of Consumer Finances, on of the greatest benefits is, of course, financial.
Looking back over the last 15 years, and a time frame that also includes the housing and real estate crisis of 2008-2009, the net worth of a typical homeowner fell between 31 and 46 times greater than that of a typical renter.
The median home homeowner in this time period enjoyed nearly $200,000 in net worth while the median renter realized just over $5,000.
A homeowners' net worth and wealth is primarily built from building up equity in their home. Equity is simply the value of mortgaged real estate less the amount owed and accumulated through paying the principal. Buying under fair market value (yes, you can get a discount, but long gone for now are the deep discounts of years past) a greater down payment and also making extra principal payments monthly or annually can also build equity faster. In addition to building equity faster, making a 20 extra principal payment monthly or about one extra mortgage payment per year can literally cut the life of a 30 year loan in half, saving you thousands.
Juanita Limes - Your Greater Dayton Area Ohio Realtor - Give me a shout for all your real estate needs,
937-776-6903 or just email me.