New York Times Says Homeownership Is Best Way To Build Wealth

Dated: 09/02/2015

Views: 57

by the kcm crew 8/31/15


The housing market has made a strong recovery, not only in sales and prices, but also in the confidence of consumers and experts as an investment. In a New York Timeseditorial entitled, Homeownership and Wealth Creation” they explain:

“Homeownership long has been central to Americans’ ability to amass wealth; even with the substantial decline in wealth after the housing bust, the net worth of homeowners over time has significantly outpaced that of renters, who tend as a group to accumulate little if any wealth.”

Many of the points that were made in the article are on track with the research that theFederal Reserve has also conducted in their Survey of Consumer Finances.

The study found that the average net worth of a homeowner ($194,500) is 36x greater than that of a renter ($5,400).

The National Association of Realtors (NAR) expanded on the Federal Reserve’s research and projected that by the end of 2015, the average homeowner will have nearly 41x the net worth of a renter. Their findings are detailed in the graph below:

Increasing Gap In Family Wealth | Keeping Current Matters

One reason for this large discrepancy in net worth is the concept of ‘forced savings’ created by having a mortgage payment and was explained by the Times:

“Homeownership requires potential buyers to save for a down payment, and forces them to continue to save by paying down a portion of the mortgage principal each month.”

“Even in instances where renters have excess cash, saving a substantial amount is difficult without a near-term goal, like a down payment. It is also difficult to systematically invest each month in stocks, bonds or other assets without being compelled to do so.”  

Bottom Line

“As a means to building wealth, there is no practical substitute for homeownership.” If you are a renter who is considering making a purchase, sit with a local real estate professional who can explain the benefits of signing a contract to purchase over renewing your lease!

Blog author image

Jason DePaz

Jason has been a real estate broker since 2005 and has continued to sharpen his skills to become one of the most outstanding agents in Portland. Working with Jason you will find that he is an excelle....

Want to Advertise on this Site?

Latest Blog Posts

Portland Active Foreclosures For Sale

Looking for the latest bankowned properties in Portland Oregon?  Click the picture for access to the list.;

Read More

What Are The Top Home Selling Tips

Selling a home for top dollar takes some work but is worth the extra effort.  If you think posting a sign and advertising it on the internet will get it done, you are incorrect.  Top

Read More

What Is Your Home Worth In Portland Oregon

Curious of what your home is currently worth?  I'll create a detailed report for you free and drop off a hard copy to your home.  Click on the link below, enter your info and receive your

Read More

Great Investment 1500000 1816ft2 Close In SE Portland Pocket Community Of Brand New Homes For Sale

$1500000 / 1816ft2 - Close in SE Portland pocket community of brand new homes for sale. The... 10 Bed )

Read More