Study Shows Relationship of Wealth Gain to Home Ownership

A recent study of net worth in the US published in the Federal Reserve Bulletin shows that homeowners have a distinct advantage over renters when it comes to net worth. According to the study, homeowners ended 2008 with an average net worth of $205,200 while renters had an average net worth of only $4,200 for the same time period. Even with homeowner net worth down from a high of $243,100 in 2007, the study shows the profound value of leveraging real estate assets over time. Most buyers invest between 5-20% of their savings into a home purchase and yet benefit, in years of appreciation, based on the home’s total value rather than just the down payment. The attached charts provide amazing evidence of the value of homeownership in the US over the year, through good times and bad.