The Survey of Consumer Finances, released in Sept. 2020 by the Federal Reserve, found the median U.S. household net worth is $121,700. However, the difference between the net worth of homeowners versus renters is staggering. (Continued Below)
In 2019, homeowners in the U.S. had a median net worth of $255,000, while renters had a net worth of just $6,300. That’s a difference of 40x between the two groups.
There are many reasons why homeowners have a higher net worth. You could argue that owning a home is much like have a forced savings account, where each month part of your mortgage payment goes into the equity of the home. Whereas, renting is a sunk cost with no return on investment.
Homes often appreciate in value, which can help increase a homeowner’s overall net worth. Plus, homeowners can take advantage of valuable tax write-offs as well that aren’t available to renters.
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Source: CNBC 1/2/24
Homeownership vs Renting
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