We all intuitively know owning a home tends to increase one’s net worth. A recent Federal Reserve Survey of Consumer Finances quantified the wealth gap between homeowners and renters.
If you currently rent , you may what to sit down. In 2013, the net worth of the typical U.S. homeowner was 36 times that of the net worth of the typical renter. In dollar terms, the data showed that the median homeowner had nearly $200,000 in net worth, while the median renter had just $5,000.
Over that past 15 years, the net worth of the typical homeowner has varied between 31 and 46 times that of the net worth of the typical renter. See the graph below:
Read more about the net worth of homeowners vs. renters at the Economists’ Outlook Blog.
Is It Better to Rent or Buy?
The facts above are compelling, but there are reasons to rent. Many factors go into the decision to rent or buy. The New York Times has a great calculator on their website to help with this decision. Click here to see if it makes sense to buy your next home.
The calculator takes into account factors such as home price, length of your stay, mortgage details, taxes, closing costs and more. Everyone’s financial situation is different, so determine what works for you. If you do consider buying your next home, contact me and I’ll help you get started.