A recent report from the experts at First American reveals the link between homeownership and wealth. The report specifically states that homeownership is a great way to build one’s wealth. Economists have long studied homeownership’s links to wealth, and have found owning a home to especially be beneficial in wealth-building in regards to low-income housing.
In fact, First American was so adamant about how integral homeownership was in building wealth, the experts revealed that it is among one of the biggest factors: "For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.”
Speaking of data, the 2019 Survey of Consumer Finances, which collects various pertinent information regarding households’ finances, showed that the average homeowner possesses a staggering 40 times the household wealth of a renter (specific data pointed to roughly $254,900 for the homeowner versus $6,270 for the renter).
The results of the survey do not reveal any direct cause and effect, and no expert insight is given regarding the distribution of wealth either. In light of this, when studying the variance between the wealth of renters and homeowners by income, it further strengthens the proof of the impressive wealth-building power that comes with homeownership.
Specifically, data reveals that homeowners are wealthier than renters across the board, in every single income bracket (the one exception being the very top income bracket). To give you an idea with specific numbers, the income group of earners making the least amount of money—who were homeowners— posted an average net worth of $102,500. In contrast, renter households in that same income bracket were worth only $1,500. The report further revealed that in this lowest income category, 92% of total homeowner net worth was directly connected to the specific value of the residence.