2016: Homeowner’s Net Worth Will Be 45x Greater Than a Renter

Courtesy of Keeping Current Matters/The KCM Blog Posted: 26 Oct 2015 04:00 AM PDT Every three years the Federal Reserve conducts a Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey, which includes data from 2010-2013, reports that a homeowner’s net worth is 36 times greater than that of a renter ($194,500 vs. $5,400). In a recent Forbes article the National Association of Realtors’ (NAR) Chief Economist Lawrence Yun predicts that in 2016 the net worth gap will widen even further to 45 times greater. The graph below demonstrates the results of the last two Federal Reserve studies and Yun’s prediction: Put Your Housing Cost to Work For You Simply put, homeownership is a form of ‘forced savings’. Every time you pay your mortgage you are contributing to your net worth. Every time you pay your rent, you are contributing to your landlord’s net worth. The latest National Housing Pulse Survey from NAR reveals that 80% of consumers believe that purchasing a home is a good financial decision. Yun comments: “Though there will always be discussion about whether to buy or rent, or whether the stock market offers a bigger return than real estate, the reality is that homeowners steadily build wealth. The simplest math shouldn’t be overlooked.” Bottom Line If you are interested in finding out if you could put your housing cost to work for you through homeownership, meet with a real estate professional in your area who can guide you through the process.