Are you trying to figure out if you should rent or buy a home? Well, here's some interesting info that might help you make up your mind. Every three years, the Federal Reserve Board puts out a report called the Survey of Consumer Finances. It looks at how much money homeowners and renters have, and let me tell you, the difference is pretty big. So, if you're looking for some reassurance in your decision, this data could give you that boost of confidence you need.

Did you know that on average, homeowners have a net worth that is nearly 40 times greater than renters? It's pretty incredible how being a homeowner can really boost your financial situation!

The Big Reason Homeowner Net Worth Is So High

In the latest report that just came out this year, we found that the net worth of the average homeowner has skyrocketed, widening the gap between homeowners and renters. In the previous version of the report, the average homeowner's net worth was around $255,000, while the average renter's net worth was only $6,300. However, things have changed significantly as homeowner net worth has experienced a dramatic increase.

““. . . 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.”
”

— Survey of Consumer Finances (SCF)

You won't believe how much homeowner net worth has skyrocketed, all thanks to home equity! It's one of the major factors driving up their financial strength.

Can you believe it? In the past few years, the housing market was on fire, earning the nickname 'unicorn' years! Home prices skyrocketed because there simply weren't enough homes for sale. On top of that, tons of buyers were scrambling to snatch them up and benefit from those super low mortgage rates. With the supply being so limited and the demand so high, prices just kept climbing. Talk about lucky! Most homeowners during that period saw their equity shoot through the roof.

If you're still unsure about whether to rent or buy a home, you might be wondering if you've missed out on the opportunity to build your net worth. But let me break it down for you.

““Whether your net worth increased in recent years or not, there are steps you can take to boost that number in the coming years. . . buying a home can be a great way to grow your net worth, since home values have a tendency to rise over time.”
”

— The Ascent

You know how home prices usually go up over time? Well, even though mortgage rates are a bit higher now, prices are still increasing in lots of places because there aren't enough homes for sale compared to how many people want to buy. That's why experts think prices will keep going up in the next few years, just at a more normal pace.

If you're thinking about buying a home right now, it might not be as fast of a rise in value as we've seen lately. But still, you can expect to see your investment grow over the coming years. So, if you're financially prepared and ready to take the leap, buying a home today is a smart move that will increase your overall wealth in the long term.

““. . . when deciding to rent vs buy, one must calculate the total cost of homeownership (maintenance, utilities, commuting, etc.) and the total financial benefit. Based on new Fed data . . . the median net worth of homeowners was $396,200 vs renters at $10,400. There is no question about the wealth gains that homeownership provides.”
”

— Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR)

Bottom Line

If you're not sure whether you should rent or buy a home, just remember that owning a home can really boost your net worth in the long run. If you want to find out more about this or the other advantages of being a homeowner, let's chat.