The Key To Building Wealth Is Homeownership

With inflation on the increase, the relationship 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 a few reasons why homeownership is a worthy objective if you want to improve your financial security.

Owning a Home Is a Building Block for Financial Success

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

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

To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter (see visual below):


The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.

Equity Gains Can Substantially Boost 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 house, 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 spend in rent each month as a tenant.

To put it succinctly, NAR says:

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

Bottom Line

The disparity between a homeowner's and a renter's net worth demonstrates how important homeownership is to wealth accumulation. Let's connect now if you're ready to take the first step toward homeownership. 

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