You are currently viewing The Long-Term Financial Benefits of Home Ownership

The Long-Term Financial Benefits of Home Ownership


Fannie Mae survey recently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today’s power-packed housing market. (In case you missed it, today’s housing market is the busiest it has been in a long time. With many more buyers in the market than sellers, it’s more important than ever to have a real estate team who understands how to win an offer.)

Here are the top four financial benefits of owning a home according to consumer respondents:

  • 88% – a better chance of saving for retirement
  • 87% – the best investment plan
  • 85% – the chance to be better off financially
  • 85% – the chance to build up wealth

Additional financial advantages of homeownership included in the survey are having the best overall tax situation and being able to live within your budget.

Does homeownership actually give you a better chance to build wealth?

No one can question a person’s unique feelings about the importance of homeownership. Some people invest heavily in real estate and it pays dividends. Others buy simply because they want a place to call their own. Whatever your personal feelings on homeownership, it’s fair to ask if the numbers justify owning a home as a financial asset.

Last fall, the Federal Reserve released the Survey of Consumer Finances, a report done every three years, with the latest edition covering through 2019. Their findings confirmed that homeownership is a clear financial benefit. The survey found that homeowners have forty times higher net worth than renters ($255,000 for homeowners compared to $6,300 for renters). FORTY TIMES.

chart-gap in net worth

The difference in net worth between homeowners and renters has continued to grow. Here’s a graph showing the results of the last four Fed surveys:The above graph only includes data through 2019, but according to CoreLogic, the equity held by homeowners grew by $26,300 over the last twelve months alone. That means the gap between the net worth of homeowners and renters has probably widened even further over the last year. If you’re renting, it’s time to ask yourself if you’re giving up a chance at building equity for yourself.

chart-graph-net worth home ownership

Some might argue the difference in net worth may be due to homeowners normally having larger incomes than renters and therefore the ability to save more money. However, a study by First American shows homeowners have greater net worth than renters regardless of their income level.

Joint Center for Housing Studies of Harvard University report on homeowners and renters over the age of 65 reveals:

“The ability to build equity puts homeowners far ahead of renters in terms of household wealth…the median owner age 65 and over had home equity of $143,500 and net wealth of $319,200. By comparison, the net wealth of the same-age renter was just $6,700.”

Homeowners 65 and older have 47.6 times greater net worth than renters. Isn’t it time you stop paying your landlord’s mortgage, and invest in your future?

Bottom Line

The idea of homeownership as a direct way to build your net worth has met the test of time. Regardless of where you are in the homeownership process (ready to buy or haven’t even thought about it yet), let the Torii team help. We can even connect you with a lender who will help you determine what steps you need to take to fix/build your credit or prepare for a down payment.