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When it comes to long-term financial growth, few decisions are as impactful as buying a home. While renting might feel easier or less expensive month to month, owning real estate unlocks a key advantage: equity. And that’s exactly why homeowner net worth consistently outpaces renter net worth by a wide margin.

Why the Gap in Net Worth Is So Large

Based on recent data from the Federal Reserve and Bankrate, the average net worth of homeowner households is $396,500, compared to just $10,410 for renter households. That’s not a minor difference—it’s nearly 40 times greater.

So what drives this divide?

How Equity Drives Homeowner Net Worth

Unlike renters, homeowners benefit from a powerful financial mechanism: equity.

There are two primary ways equity builds over time:

• Monthly mortgage payments reduce your loan balance. With each payment, a portion goes toward the principal, increasing the amount of the home you own.
  

• Real estate values tend to rise over time. As market conditions push home prices upward, the property’s value increases—boosting your equity even if your loan amount stays the same.
  

Together, these forces help homeowners steadily grow their personal wealth, year after year. Think of it like an automatic savings account built into your living situation.

Renting vs. Buying: Which One Supports Wealth Growth?

Renting may offer flexibility or lower upfront costs, especially in certain markets. But those savings are often short-term. The real question is what your housing choices mean for your financial future.

Even if buying a home means a higher initial investment, the long-term payoff can be substantial. Joel Berner, Senior Economist at Realtor.com, puts it plainly:

“Households working on their budget will find it much easier to continue to rent than to go through the expenses of homeownership. However, they need to consider the equity and generational wealth they can build up by owning a home that they can’t by renting it. In the long run, buying a home may be a better investment even if the short-run costs seem prohibitive.”

The Importance of a Thoughtful Plan

Homeowner net worth doesn't grow overnight. Like any major investment, real estate requires careful planning and long-term commitment. The key is to move forward when you’re financially prepared—and with the right guidance.

Working with a knowledgeable local professional can help you assess your budget, understand current market conditions, and explore financing options that make sense for your goals. Whether you're ready to buy now or thinking ahead, having a plan in place is the first step toward building wealth through homeownership.

There’s a reason homeowners consistently lead the way in wealth-building statistics: equity. While renting might be the right fit in the short term, owning a home provides a long-term strategy for financial growth.

At Elevated Life Realty, LLC, we believe in helping you make informed, confident decisions—whether it’s your first home or your next. When the time is right for you, we’re here to guide you every step of the way.