Every three years, the Federal Reserve conducts their Survey of Consumer Finances in which they collect data across all economic and social groups. The latest survey data, covering 2013-2016 was released two weeks ago.
The study revealed that the 2016 median net worth of homeowners was $231,400 - a 15% increase since 2013. At the same time, the median net worth of renters decreased by 5% ($5,200 today compared to $5,500 in 2013).
These numbers reveal that the net worth of a homeowner is over 44 times greater than that of a renter.
Owning a Home is a Great Way to Build Family Wealth
As we’ve said before, simply put, homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you are contributing to your net worth by increasing the equity in your home.
That is why, for the fourth year in a row, Gallup reported that Americans picked real estate as the best long-term investment. This year’s results showed that 34% of Americans chose real estate, followed by stocks at 26% and then gold, savings accounts/CDs, or bonds.
Greater Equity in Your Home Gives You Options
There is so much that you can do with the equity in your home! You can get a lump sum of money, or a line of credit. You can make home improvements (the #1 use), use the money to pay off your high interest credit card debt, buy another property as an investment to pay off your current home loan, emergency savings, even retirement income. Just remember, you will have to eventually pay that back and there are up and down sides to all of these options. Always consult with a financial adviser and a real estate expert before making any big decisions.
Sources: Keeping Current Matters, Bankrate.com