Funny picture but there is a HUGE difference between the net worth of home owners and renters…
I am sure you have heard that real estate, especially owning a home, is a great way to build wealth. According to research from the Federal Reserve, a homeowner’s net worth is 36X greater than a renter.
Which is a HUGE difference and does make you wonder why people rent when they could buy?
NAR Chief Economist Lawrence Yun said in a recent Forbes article that homeowners will soon have 45X the net worth of renters.
Check out this chart to get a better idea of the difference between renter and home owner wealth:
Some would accuse the NAR of always saying that owning a home is the right thing…
I would say that owning beats the heck out of renting but YOU must decide what is best for you.
Whether you own or rent, someone owns the property and is building wealth. It is either you OR your landlord because you are sending them money every month!
If you use a 30-year fixed rate mortgage, your monthly housing payment will stay the same. The taxes and insurance may increase (what else is new).
If you are renting, these increases will be passed on to you in the form of increased rent.
It isn’t just me saying this either…
Consider this quote from Christina Boyle, Senior Vice President and Head of Single-Family Sales & Relationship Management at Freddie Mac:
With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.
IF… Only 2 Letters BUT Such a BIG Word
I agree that buying a home can be a great financial decision but only IF you buy smart.
You must have a good team in your corner to make sure you buy smart. This means an experienced local Buyers Agent, mortgage professional, inspector, etc.
Some people are going to say that investing in whatever crap they are selling is a better investment. You might be able to get pretty decent returns on sticking your money into other investments.
But you will still be paying to live somewhere…
And someone is going to be building wealth…
Either you or your landlord!
And that my friends is the Ugly But Honest Truth about Home Ownership and Building Wealth