There are multiple reasons why Americans opt for purchasing a home instead of renting. Some of the most common non-financial reasons include having the flexibility to make the space your own, the pride homeownership offers and a sense of stability. A large number of Americans would rather own a home than rent because of the unique way homeownership builds wealth over time as well.
And experts agree – the home you own is an important tool for building your net worth. Here’s what many of those experts have to say about building long-term financial stability through homeownership.
Mark Fleming, Chief Economist at First American, explained that a home is the only asset that’s both an investment and a place that you’re proud to call home.
“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 can leverage the wealth they generate in several ways throughout their life. Tapping into accumulated equity has long been used to pay for the cost of an education, to start a business, or to fund various other expenses. The Joint Center of Housing Studies at Harvard points out:
“. . . 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.”
Additionally, according to the National Association of Realtors (NAR):
“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, . . .”
With home prices expected to continue to appreciate in the next few years, homebuyers have an opportunity to start building wealth right now. Connect with an agent today if you’re ready to get on the path to becoming a homeowner.