Homeownership Is Full of Financial Benefits

AFannie Maesurveyrecently revealed some of the most highly-rated benefits of homeownership, which continue to be key drivers in today's power-packed housing market. 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. However, it's fair to ask if the numbers justify homeownership as afinancialasset.

Last fall, theFederal Reservereleased theSurvey 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 thathomeownershave forty times higher net worth than renters(255,000 for homeowners compared to 6,300 for renters).

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 toCoreLogic, theequityheld 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.

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, astudybyFirst Americanshows homeowners have greater net worth than renters regardless of their income level. Here are the findings:Others may think homeowners are older and that's why they have a greater net worth. However, aJoint Center for Housing Studies ofHarvard Universityreporton homeowners and renters over the age of 65 reveals:

The ability to build equity puts homeowners far ahead of renters in terms of household wealththe 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.

Bottom Line

The idea of homeownership as a direct way to build your net worth has met the test of time. Let's connect if you're ready to take steps toward becoming a homeowner.