A Key To Building Wealth Is Homeownership

<article class="post-236161 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-236161"><span class="entry-date">March 28, 2022</span><div class="entry-header center-block text-center"><h1 class="entry-title">A Key To Building Wealth Is Homeownership</h1><div class="shareBlock"><div class="shareTitle">Share</div><div class="shareIcons"><a aria-label="Twitter Share Link" class="twitter solid display-inline-block" data-tracking="Post,Social Post Link Clicked,Twitter" href="http://twitter.com/share?text=A+Key+To+Building+Wealth+Is+Homeownership&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fa-key-to-building-wealth-is-homeownership%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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<p><img alt="A Key To Building Wealth Is Homeownership | Simplifying The Market" class="webfeedsFeaturedVisual wp-post-image" decoding="async" link_thumbnail="" loading="lazy" sizes="auto, (max-width: 549px) 100vw, 549px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150151/20220328-KCM-Share-549×300.jpg" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150151/20220328-KCM-Share-549×300.jpg 549w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150151/20220328-KCM-Share.jpg 750w" style="display: block; margin-bottom: 5px; clear:both;max-width: 100%;" width="358"/></p>
<p>The link between financial security and homeownership is especially important today as <a href="https://www.simplifyingthemarket.com/2022/01/11/why-inflation-shouldnt-stop-you-from-buying-a-home-in-2022/?a=712984-fa409495d5d70154d03a25e81e9540e2">inflation</a> rises.  But many people may not realize just how much owning a home contributes to your overall <a href="https://www.simplifyingthemarket.com/2022/02/21/real-estate-voted-the-best-investment-eight-years-in-a-row/?a=712984-fa409495d5d70154d03a25e81e9540e2">net worth</a>. As Leslie Rouda Smith, President of the <em>National Association of Realtors</em> (NAR), <a href="https://www.nar.realtor/newsroom/middle-income-households-gain-2-1-trillion-in-housing-wealth-in-a-decade">says</a>:<span id="more-46232"></span></p>
<blockquote>
<p><em>“Homeownership is rewarding in so many ways and can serve as a vital component in achieving financial stability.” </em></p>
</blockquote>
<p>Here are just a few reasons why, if you’re looking to increase your financial stability, homeownership is a worthwhile goal.</p>
<h4><strong>Owning a Home Is a Building Block for Financial Success</strong></h4>
<p>A recent NAR <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-report-02-23-2022_0.pdf">report</a> details several homeownership trends and statistics, including the difference in net worth between homeowners and <a href="https://www.simplifyingthemarket.com/2022/02/25/the-difference-between-renting-and-owning-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2">renters</a>. It finds:</p>
<p><em>“. . . the net worth of a homeowner was about <strong>$300,000 while that of a renter’s was $8,000 in 2021</strong>.”</em></p>
<p><strong>To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter</strong> <em>(see visual below):</em></p>
<p><a href="https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150139/20220328-MEM-Eng.png"><img alt="A Key To Building Wealth Is Homeownership | Simplifying The Market" class="aligncenter wp-image-46233" decoding="async" height="488" loading="lazy" sizes="auto, (max-width: 650px) 100vw, 650px" src="https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150139/20220328-MEM-Eng.png" srcset="https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150139/20220328-MEM-Eng.png 960w, https://files.simplifyingthemarket.com/wp-content/uploads/2022/03/24150139/20220328-MEM-Eng-400×300.png 400w" width="650"/></a></p>
<p>The results from this report show that owning a home is a key piece to the puzzle when building your overall net worth.</p>
<h4><strong>Equity Gains Can Substantially Boost a Homeowner’s Net Worth</strong></h4>
<p>The net worth gap between owners and renters exists in large part because homeowners build <a href="https://www.simplifyingthemarket.com/2022/03/21/the-average-homeowner-gained-more-than-55k-in-equity-over-the-past-year/?a=712984-fa409495d5d70154d03a25e81e9540e2">equity</a>. As a homeowner, your equity grows as your home <a href="https://www.simplifyingthemarket.com/2022/03/03/are-home-prices-continuing-to-rise/?a=712984-fa409495d5d70154d03a25e81e9540e2">appreciates</a> in value and you make your mortgage payments each month.</p>
<p>In other words, when you own your home, you have the benefit of your mortgage payment acting as a contribution to a forced savings account. And when you sell, any equity you’ve built up comes back to you. <strong>As a </strong><a href="https://www.simplifyingthemarket.com/2022/01/31/owning-is-more-affordable-than-renting-in-the-majority-of-the-country/?a=712984-fa409495d5d70154d03a25e81e9540e2"><strong>renter</strong></a><strong>, you’ll never see a return on the money you pay out in rent every month.</strong></p>
<p>To sum it up, NAR says it <a href="https://cdn.nar.realtor/sites/default/files/documents/2022-snapshot-of-race-and-home-buying-in-the-us-report-02-23-2022_0.pdf">simply</a>:</p>
<blockquote>
<p><strong><em>“Homeownership has always been an important way to build wealth.”</em></strong></p>
</blockquote>
<h3><strong>Bottom Line</strong></h3>
<p>The gap between a homeowner’s net worth and a renter’s shows how truly foundational homeownership is to wealth-building. If you’re ready to start on your journey to homeownership, let’s connect today.</p>
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