How Homeownership Delivers Unsurpassed Family Wealth

There are many financial benefits to homeownership, but probablynone more important than its ability to create family wealth.

How Housing Matters is a joint project ofthe Urban Land Institute andthe MacArthur Foundation. It is an online resourcefor research and information on how homeownership contributes toindividual and community success.

Their article, TheFirst Rung on the Ladder to Economic Opportunity Is Housing,explains the importance of homeownership to a family’sfinancial health. In that article, they simply stated:

“The ladder to economic success can stretch only sohigh without the asset-building power ofhomeownership.”

To this point, National Association ofRealtors’ (NAR) Economists’ OutlookBlog revealed in a recent post:

“Housing wealth contributes positively to thehomeowner’s and children’s economic condition, becausehome equity can be tapped for expenditures such as investing inanother property (which can generate rental income), homerenovation (which further increases the home value), achild’s college education, emergency or major life events, orexpenses in retirement…

Housing wealth (or net worth or equity) is built up overtime via the home price appreciation and the principal paymentsthat the homeowner makes on the loan.”

Here is a graph showing the build-up of wealth overtime:

Just last month, NAR’s Chief Economist, LawrenceYun, explained that even though home appreciationhas slowed, homeowners are still building wealth:

“Homeowners in the majority of markets are continuingto enjoy price gains, albeit at a slower rate of growth. A typicalhomeowner accumulated $9,500 in wealth over the pastyear.”

Later in life, this wealth iscrucial…

This wealth is important to a family’s retirement plans.In a recent report from the Joint Center for Housing Studies atHarvard University titled, Housing America’s OlderAdults 2018, they revealed that a renter 65 years old or olderhas a net worth of $6,710. Meanwhile, a homeowner 65+ years old hasa net worth of $319,200. That huge difference will allow for adramatic upgrade in one’s lifestyle during your retirementyears.

Bottom Line

Homeownership builds wealth. This, in turn, allows families tohave more and better options when it comes to their children andtheir life in retirement.