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    Homeowner’s Net Worth is 45 Times Greater than a Renter’s

    Owning a Home Creates Wealth

    Yes, you read that correctly. I think it’s safe to say that is a rather large distinction.

    The Survey of Consumer Finances is conducted by the Federal Reserve across all social and economic groups every three years. The latest survey includes data from 2010-2013 and reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400).

    Chief Economist Lawrence Yun for the National Association of Realtors (NAR) predicts that the net worth gap will widen in 2016 to 45 times greater for homeowners as compared to renters (as detailed in the chart below). This was reported in a recent Forbes article.

    net_worth_chart

    This net-worth comparison indicates that homeownership is a form of “forced savings.” With each mortgage payment, the owner contributes to his net worth. With each rental payment, the renter contributes to the landlord’s net worth.

    NAR’s latest National Housing Pulse Survey states that 85% of consumers believe that a home purchase is a good financial decision. Yun comments, “Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.”
     
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    Source:
    Keeping Current Matters

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