Growing Your Net Worth with Homeownership

<article class="post-819709 post type-post status-publish format-standard has-post-thumbnail hentry" id="post-819709"><span class="entry-date">October 12, 2023</span><div class="entry-header center-block text-center"><h1 class="entry-title">Growing Your Net Worth with 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=Growing+Your+Net+Worth+with+Homeownership&amp;url=https%3A%2F%2Fgilliggroup.com%2Fblog%2Fgrowing-your-net-worth-with-homeownership%2F" target="_blank"><span class="force-hidden">Twitter</span></a>
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</div></div><div class="post-tax post-category"><span></span><a href="../category/realtor-blog/index.html" rel="tag">Realtor Blog</a></div><div class="post-tax post-post_tag"></div></div><div class="entry-content"><div><img alt="Growing Your Net Worth with Homeownership Simplifying The Market" decoding="async" loading="lazy" src="https://media.agentaprd.com/sites/222/20231012-Growing-Your-Net-Worth-with-Homeownership.webp" style="display: block; margin-bottom: 5px; clear: both; max-width: 100%;" width="358"/>
<p>Take a moment to imagine where you want to be in a few years. You might be thinking about your job, money, wanting more stability, or goals you want to reach soon. Is <a href="https://www.simplifyingthemarket.com/2023/09/21/the-many-non-financial-benefits-of-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">homeownership</a> a part of that vision? If it is, you should know owning a home has a whole lot of financial benefits.</p>
<p>One of the many reasons to <a href="https://www.simplifyingthemarket.com/2023/10/06/how-homeowner-net-worth-grows-with-time-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">buy a home</a> is that it’s a great way to build wealth and gain financial stability. That’s because the value of most homes increases over time, which in turn grows your <a href="https://www.simplifyingthemarket.com/2023/10/02/unpacking-the-long-term-benefits-of-homeownership/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">net worth</a>. Here’s how home values are rising right now. <a href="https://zillow.mediaroom.com/2023-09-26-U-S-housing-value-has-surged,-gaining-more-than-2-6-trillion-in-the-past-year" rel="noopener noreferrer" target="_blank">According</a> to <em>Zillow</em>:</p>
<blockquote><p><em>“The total value of the U.S. housing market – the sum of Zillow’s estimated value for every U.S. home – is now slightly less than $52 trillion, </em><strong><em>which is $1.1 trillion higher than the previous peak reached last June</em></strong><em>.”</em></p></blockquote>
<p>Basically, homeownership is a tremendous wealth-building tool. And with home values back <a href="https://www.simplifyingthemarket.com/2023/10/03/home-prices-are-not-falling/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">on the rise</a> across the nation, now might be a good time to consider if <a href="https://www.simplifyingthemarket.com/2023/10/04/understanding-the-benefits-of-owning-your-first-home/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">owning a home</a> is something you want to reach for.</p>
<p>Here’s a look at some data to see how much owning a home can really make a difference in your life.</p>
<h4><strong>Household Net Worth Is Rising </strong></h4>
<p><a href="https://twitter.com/DianeSwonk/status/1706663509331718197" rel="noopener noreferrer" target="_blank">Data</a> shows that while those in the top 1% saw the most dramatic net worth increase, people from every single tax bracket have seen their wealth grow over the past few years (<em>see graph below</em>):</p>
<p> <a href="https://www.simplifyingthemarket.com/content/images/20231011/20231012-Household-Net-Worth-Up-Dramatically.png?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20231011/20231012-Household-Net-Worth-Up-Dramatically.png"/></a></p>
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<p>For many of those people, the <a href="https://www.simplifyingthemarket.com/2023/09/12/what-experts-project-for-home-prices-over-the-next-5-years/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">rising value</a> of their home plays a big part in that.</p>
<h4><strong>Owning a Home Helps You Achieve Financial Success</strong></h4>
<p>You can tell homeownership had a lot to do with that growth because there’s a significant net worth gap between homeowners and renters. As Lawrence Yun, Chief Economist at the <em>National Association of Realtors</em> (NAR), <a href="https://www.nar.realtor/magazine/real-estate-news/study-homeowner-wealth-is-40-times-higher-than-renters" rel="noopener noreferrer" target="_blank">says</a>:</p>
<blockquote><p> <em>“. . . homeownership is a catalyst for building wealth for people from all walks of life. A monthly mortgage payment is often considered a forced savings account that </em><strong><em>helps homeowners build a net worth about 40 times higher than that of a renter</em></strong><em>.”</em></p></blockquote>
<p>The big reason why? Homeowner’s <a href="https://www.simplifyingthemarket.com/2023/09/08/home-price-forecasts-revised-for-2023-infographic/?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank">build equity</a>. Home equity is the value of your home minus the amount you owe on your mortgage. And for most homeowners, that’s the largest contributor to their net worth. Here’s the <a href="https://blog.firstam.com/economics/homeownership-remains-strongly-linked-to-wealth-building" rel="noopener noreferrer" target="_blank">data</a> from <em>First American</em> to prove it (<em>see graph below</em>):</p>
<p><a href="https://www.simplifyingthemarket.com/content/images/20231011/20231012-Housing-Piece-of-Net-Worth-Is-Crucial-.png?a=712984-fa409495d5d70154d03a25e81e9540e2" rel="noopener noreferrer" target="_blank"><img decoding="async" src="https://files.keepingcurrentmatters.com/content/images/20231011/20231012-Housing-Piece-of-Net-Worth-Is-Crucial-.png"/></a></p>
<p></p>
<p>The blue portion of each bar represents housing as a portion of net worth – and it’s clearly a bigger contributor than other investments like stocks, gold, and cryptocurrencies. As you can see, across different income levels, homeownership does more to build the average household’s wealth than anything else.</p>
<h3>Bottom Line</h3>
<p><span style="color: black;">One of the biggest benefits of owning a home is that it can provide an avenue to grow your net worth. Connect with a local real estate professional so you can </span><a href="https://www.simplifyingthemarket.com/2023/09/25/beginning-with-pre-approval/" rel="noopener noreferrer" target="_blank">start</a><span style="color: black;"> investing in homeownership.</span></p>
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