The Power of Equity
"In deciding whether to rent or own, it’s important to remember the wealth-building power of equity accumulation." — Mark Fleming, Chief Economist, First American
Unlike renters, homeowners gain equity through two primary channels:
- Mortgage Paydown: Each payment reduces the loan balance.
- Appreciation: The home's market value rises over time.
That's why, on average, a homeowner's net worth is nearly 40x higher than a renter's.
The Gap is Growing as Home Values Rise Over Time
| Year | Homeowner's Net Worth | Renter's Net Worth |
|---|---|---|
| 2010 | $187,000 | $5,400 |
| 2013 | $201,500 | $5,500 |
| 2016 | $246,200 | $5,300 |
| 2019 | $255,000 | $6,300 |
| 2022 | $396,200 | $10,400 |
If you're ready and able to buy, you have the chance to start gaining equity and growing your wealth right now.
Let's connect if you want to learn more about the financial benefits of homeownership or the programs that can help make buying possible.
Sources: First American, The Fed
Some Highlights
- If you’re torn between renting or buying, don’t forget to factor in the wealth-building power of homeownership.
- Unlike renters, homeowners gain equity as they pay their mortgage and as home values rise. That’s why, on average, a homeowner’s net worth is nearly 40x higher than a renter’s.
- Connect with an agent if you want to learn more about the financial benefits of homeownership or the programs that can help make buying possible.
