Homeownership Provides a Path to Long-Term Wealth

According to a new poll conducted by LendingTree.com, there are a variety of reasons why Americans would choose to buy rather than rent a house. The following are some of the most common non-financial reasons:

• The freedom to make the place your own
• The pride that comes with becoming a homeowner
• The feeling of security

Because of the unique way homeownership creates wealth over time, 41% of respondents in the same study said they’d rather own a home than rent.

Experts believe that owning a house is an essential strategy for increasing your net worth. Here’s what a lot of those experts have to say about achieving long-term financial security by purchasing a property.

The National Association of Realtors (NAR) states:

“Homeowners who purchased a typical single-family existing-home 30 years ago at the median sales price of $103,333 with a 10% down payment loan and who sold the property at the median sales price of $357,700 in 2021 Q2 accumulated housing wealth of $349,258, . . .”

A home, according to Mark Fleming, Chief Economist of First American, is genuinely a one-of-a-kind asset. It’s the only asset that serves as both an investment and a personal residence.

“The major financial advantage of homeownership is the accumulation of equity in the form of house price appreciation. . . . We won’t always have 17% house price appreciation, but we have to take into account the fact that the shelter that you’re owning is an equity-generating or wealth-generating asset.”

Homeowners may take advantage of the money they create in a variety of ways during the course of their lives. Using accumulated equity to pay for a college education, start a business, or cover numerous other costs has been done for a long time. According to Harvard’s Joint Center for Housing Studies:

“. . . by paying down mortgage principal each month and participating in the long-term appreciation of home values, a family can build wealth that can be used for retirement or other needs, including helping the next generation.”

Bottom Line

Homebuyers have the chance to begin the long-term wealth-building process right now, as property values are projected to continue to rise in the coming years. If you’re ready to start the process of becoming a homeowner, connect with us today.