The Dramatic Impact of Homeownership on Net Worth

If you’re trying to decide whether to rent or buy a home this year, here’s a powerful insight that could give you the clarity and confidence you need to make your decision.

Every three years, the Federal Reserve releases the Survey of Consumer Finances (SCF), which compares net worth for homeowners and renters. The latest report shows the average homeowner’s net worth is almost 40X greater than a renter’s (see graph below):

One reason a wealth gap exists between renters and homeowners is because when you’re a homeowner, your equity grows as your home appreciates in value and you make your mortgage payment each month. When you own a home, your monthly mortgage payment acts like a form of forced savings, which eventually pays off when you decide to sell. As a renter, you’ll never see a financial return on the money you pay out in rent every month. Ksenia Potapov, Economist at First Americanexplains it like this:

“Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments . . .”

The Largest Part of Most Homeowner Net Worth Is Their Equity

Home equity does more to build the average household’s wealth than anything else. According to data from First American and the Federal Reserve, this holds true across different income levels (see graph below):

The green segment in each bar represents how much of a homeowner’s net worth comes from their home equity. Based on this data, it’s clear no matter what your income level is, owning a home can really boost your wealth. Nicole Bachaud, Senior Economist at Zillowshares:

“The biggest asset most people are ever going to own is a home. Homeownership is really that financial key that helps unlock stability and wealth preservation across generations.”

If you’re ready to start building your net worth, the current real estate market offers several opportunities you should consider. For example, with mortgage rates trending lower lately, your purchasing power may be higher now than it has been in months. And, with more inventory coming to the market, there are more options for you to consider. A local real estate agent can walk you through the opportunities you have today and guide you through the process of finding your ideal home.

Bottom Line

Thank you for joining us on this journey exploring the merits of homeownership. If you're captivated by the idea of making Telluride your permanent home, let Mountain Rose Realty be your guiding light in the realm of real estate.

Our team, led by the experienced and dedicated Anne-Britt Ostlund, is committed to helping you find the perfect piece of Telluride real estate that suits your lifestyle and preferences. Whether you're searching for a cozy mountain retreat or a spacious family home, we have an array of Telluride homes for sale to cater to every need.

At Mountain Rose Realty, we understand the significance of homeownership beyond just a financial investment. It's about crafting a life amid the breathtaking landscapes of Telluride, where every sunrise and sunset feels like a masterpiece painted just for you.

Explore our listings to uncover the charm and allure of Telluride homes for sale, and let us guide you seamlessly through the buying process. As your trusted partner in real estate, we prioritize your dreams and work tirelessly to turn them into a reality.

Make the wise choice of partnering with Mountain Rose Realty for all your Telluride real estate endeavors. Together, let's transform your vision of a dream home into an address you can proudly call your own.

For more information and to embark on your journey to homeownership, contact Anne-Britt Ostlund and the Mountain Rose Realty team today. Your dream home in Telluride awaits!

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Mountain Rose Realty
220 East Colorado Avenue Suite 210
Telluride, CO 81435

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