Deciding whether to rent or buy a home? Here’s a compelling reason to consider buying: homeowners build significantly more wealth than renters.

According to the Federal Reserve Board’s Survey of Consumer Finances (SCF), the difference in net worth between the two groups is staggering. In fact, the average homeowner’s net worth is nearly 40 times greater than that of a renter.

Why Homeowners Are So Much Wealthier

In the previous SCF report, the average homeowner had a net worth of about $255,000, compared to just $6,300 for the average renter. The gap has grown even wider in the most recent update, driven by a key factor: home equity.

Home equity is the difference between the market value of your home and what you owe on your mortgage. You build equity by paying down your loan and benefiting from rising home values.

Over the past few years, home prices surged due to a significant shortage of available homes for buyers. This created rapid equity gains for homeowners, further widening the wealth gap.

The SCF highlights this trend:

“. . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

Why Now May Be the Right Time to Buy

While home price growth has slowed from the pandemic boom, experts predict it will continue at a more moderate pace. This means buying a home now can still offer long-term financial benefits, including potential equity gains.

As Ksenia Potapov, Economist at First American, explains:

“Despite the risk of volatility in the housing market, homeownership remains an important driver of wealth accumulation and the largest source of total wealth among most households.”

However, real estate trends can vary greatly by location. That’s where a local real estate expert comes in. A knowledgeable agent can provide key insights into your market, helping you understand both the financial and lifestyle advantages of homeownership in your area.

Renting vs. Buying: More Than Just Numbers

As Bankrate points out:

“Deciding between renting and buying a home isn’t just about cost — the decision also involves long-term financial strategies and personal circumstances.”

If you’re weighing your options, connecting with a trusted real estate agent can help. They’ll guide you through local trends and programs designed to make buying more accessible.

Bottom Line

Owning a home can be one of the most effective ways to build wealth over time. If you’re considering making the leap to homeownership, let’s connect! I can provide personalized guidance and help you explore programs that make buying a home a reality.