Anyone living in the Denver metro area in the past few years knows that home values have skyrocketed, creating opportunities for sellers like never before. But even in more normal markets, owning a home builds wealth.
For example, the website Keeping Current Matters recently cited a report from the National Association of Realtors (NAR), which found a large gap in net worth between homeowners and renters. NAR noted that “the net worth of a homeowner was about $300,000, while that of a renter’s was $8,000 in 2021.” That’s about 40 times the net worth of a renter, Keeping Current Matters points out.
It’s no mystery why this happens. Homeowners put money aside in mortgage payments each month, building equity. Equity also grows as homes appreciate.
As Bankrate notes: “A home is one of the only assets that have the potential to appreciate in value as you pay it down.”
It acts like a “forced savings account,” says Keeping Current Matters. When you sell the house, all that saved money comes back to you, unlike paying rent. “As a renter, you’ll never see a return on the money you pay out in rent every month.”
In sum, says Keeping Current Matters, “Owning a home is an important part of building your net worth.”