It’s no secret that homeownership has its perks – stability, security, personalization and much more. By far the biggest perk of homeownership is the combination of both forced savings (by paying down your mortgage loan) and appreciation of home values. This one-two punch helps homeowners grow their net worth much faster and larger than renters. Net worth is defined as all your assets (real estate, retirement savings, traditional savings, cars, etc) minus your liabilities (mortgage loans, car loans, student loans, credit card debts, etc).
The wealth gap between renters and homeowners has only increased over the last decade. According to the Federal Reserve, in 2010, renters had a net worth of $6,010 while homeowners had a net worth of $203,850 – a wealth gap of $203,850. In 2019, renters net worth remained fairly stagnant at $6,270, while homeowners net worth increased to $254,900. This is nearly entirely attributed to the wealth created by home ownership.
Renters have a tough hill to climb. While wages have not really increased in the last decade, expenses have only gone up. It’s difficult for renters to save for a downpayment while paying off student debt, consumer debt and increased housing costs. On top of that, with home prices increasing, the amount required for a downpayment continues to creep up, too. Some renters will be chasing homeownership for years.
As I tell all my renter clients, and have told them for years, it pays to participate in the real estate market. Sometimes that means getting your start in something less than ideal, smaller than preferred, in a different location, and make a sacrifice to get into ownership. Once you have a few years under your belt, you’ll have equity, appreciation and some savings to move up into a bigger and better housing situation. There are always options if you’re willing to sacrifice and save towards a better future. When homeowners’ net worths are 40x more than renters, what do you have to lose?
If you have questions about how to participate in the real estate market by purchasing a house, I can help. Text, email or call me and I’ll hit the ground running, providing a strategy that works for your unique situation.
About the Author: Jared Reimer is a native Coloradoan and an Associate Broker at Elevations Real Estate in Old Town Fort Collins. He’s a community advocate, business champion, blogger, leader, tireless volunteer, innovator, thinker and expert on all things real estate in Fort Collins and surrounding Northern Colorado. You’re likely to find Jared spending quality time outside with his wife, Kacie, and his kids, Hudson and Isla, or sharing a beer or two with a friend throughout Fort Collins. Call or text Jared at 970.222.1049 or email him at Jared@TheCraftBroker.com