The majority of American households own a primary residence, but did you know that homeowners have, in general, more net worth than their renter counterparts?
The National Association of REALTORS® tracks the relationship between renting, homeownership, and net worth. Every three years the Federal Reserve conducts their Survey of Consumer Finances to collect the data which is then analyzed. In the most recent survey completed in 2016, the data showed that the median homeowners’ net worth ($231,000) was more than ti44mes that of the median renter ($5,200).
Equity in a home (the difference between what is owed on the mortgage and what the home may sell for in today’s market) is one of the biggest drivers of net worth. When a renter pays rent, no equity is created for the renter – that goes straight to the landlord’s pocket! But when someone has purchased a home that monthly payment usually goes to paying down the loan, creating equity. The homeowner also receives the benefit of property appreciation – and if they don’t refinance, the principal and interest payment stays the same (assuming a fixed rate loan) whereas a renter may be faced with annual rent increases.
Of course, there are pros and cons to either renting or purchasing a home, and these should be considered before jumping into a home purchase. Appreciation and rental rates change from area to area and even neighborhood to neighborhood!
I would be happy to show you the possibilities. Please give me a call: (206) 790-0081 or send an email to Jamie@JamieFlaxman.com.