Imagine where you want to be in a few years. You might be thinking about your job, wanting more financial stability, or setting goals you wish to achieve soon. Is owning a home a part of that vision? If it is, you should know that homeownership comes with a lot of financial benefit
Owning a home is a smart investment because it helps you build wealth and achieve financial security. As the value of homes typically appreciate over time, it increases your net worth. Currently, the value of homes is on the rise, as reported by Zillow.
“The total value of the U.S. housing market – the sum of Zillow’s estimated value for every U.S. home – is now slightly less than $52 trillion, which is $1.1 trillion higher than the previous peak reached last June.”
Homeownership is a great way to build wealth, and with home values rising nationwide, it may be a good time to consider owning a home.
Here’s a look at some data to see how much owning a home can really make a difference in your life.
Household Net Worth Is Rising
Data shows that while those in the top 1% saw the most dramatic net worth increase, people from every single tax bracket have seen their wealth grow over the past few years (see graph below):
For many of those people, the rising value of their home plays a big part in that.
Owning a Home Helps You Achieve Financial Success
You can tell homeownership had a lot to do with that growth because there’s a significant net worth gap between homeowners and renters. As Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), says:
“. . . homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that helps homeowners build a net worth about 40 times higher than that of a renter.”
The big reason why? Homeowner’s build equity. Home equity is the value of your home minus the amount you owe on your mortgage. And for most homeowners, that’s the largest contributor to their net worth. Here’s the data from First American to prove it (see graph below):
The blue part of each bar in the chart represents the proportion of net worth that comes from housing – and it is clearly a more significant contributor than other investments such as stocks, gold, and cryptocurrencies. As you can see, regardless of income levels, owning a home does more to increase the wealth of an average household than any other investment.
Bottom Line
Investing in homeownership can grow your net worth. Contact me , James Jestes 386-315-4744 to learn more.
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