Renting vs. Buying: The Net Worth Gap You Need To See

According to Keeping Current Matters, if you’re trying to decide between renting and buying, consider this: homeownership can significantly increase your net worth. The Federal Reserve’s Survey of Consumer Finances (SCF) reveals that, on average, a homeowner’s net worth is nearly 40 times that of a renter. This wealth gap is largely due to equity, the difference between your home’s value and your mortgage balance, which increases as you pay down your mortgage and as home prices rise.

The latest SCF report highlights a record increase in net worth among homeowners, fueled by rising home values and an ongoing supply-demand imbalance. This shortage of available homes continues to drive up prices, suggesting that now could be a great time to buy. Expert forecasts predict more moderate price appreciation in the coming year, meaning potential equity gains for new homeowners.

Ksenia Potapov, an economist at First American, emphasizes that homeownership remains a crucial factor in wealth accumulation, even amid housing market fluctuations. Bankrate adds that choosing to rent or buy is not only a financial decision but also a long-term strategy influenced by individual circumstances. A knowledgeable local real estate agent can provide insights on market trends and help you assess which option suits you best.

Bottom Line: If you’re debating whether to rent or buy, remember that owning a home can be a powerful way to build wealth over time. Contact Indigo Skye Group to learn more about how homeownership could work for you.

Source: Keeping Current Matters