Owning a home is a major financial milestone and an accomplishment to be proud of. One main reason is that the equity you build as a homeowner significantly increases your net worth. With current high inflation, the link between owning a property and building wealth is especially important.

If you want to improve your financial stability, here are some reasons why now might be a good time to begin your journey toward homeownership.

Owning a Home Is a Key Ingredient for Financial Success

According to a National Association of Realtors (NAR) survey, there is a large difference in net worth between homeowners and renters. It finds:

“. . . the net worth of a homeowner was about $300,000 while that of a renter’s was $8,000 in 2021.”

To put that into perspective, the average homeowner’s net worth is roughly 40 times that of a renter’s.
This difference shows owning a home is a key step in achieving financial success.

Equity Gains Can Substantially Boost a Homeowner’s Net Worth

Because homeowners accumulate equity, there is a significant net worth difference between them and renters. When you own a home, your equity increases as the value of your home rises and you keep up with your monthly mortgage payments. This opportunity is unavailable to you as a renter. According to a recent CNET article:

“Homeownership is still considered one of the most reliable ways to build wealth. When you make monthly mortgage payments, you’re building equity in your home . . . When you rent, you aren’t investing in your financial future the same way you are when you’re paying off a mortgage.”

But on top of that, your home equity grows even more as your home appreciates in value over time. That has a major impact on the wealth you build, as a recent article from Bankrate notes:

“Building home equity can help you increase your wealth over time, . . . A home is one of the only assets that have the potential to appreciate in value as you pay it down.”

In other words, when you own a home, your mortgage payment acts as a contribution to a forced savings account that rises in value as your home does. When you sell, any equity you've built up is returned to you. As a renter, you’ll never see a return on the money you pay out in rent every month.