MARKET UPDATE | The Dramatic Impact of Homeownership on Net Worth

Dated: January 15 2024

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Northern Colorado Market Update

Market Update: January 16, 2024 | 5 min read

The Dramatic Impact of  Homeownership on Net Worth

If you're trying to decide whether to rent or buy a home this year, here's a powerful insight that could give you the clarity and confidence you need to make your decision.

Every three years, the Federal Reserve releases the Survey of Consumer Finances (SCF), which compares net worth for homeowners and renters. The latest report shows the average homeowner’s net worth is almost 40X greater than a renter’s (see graph below):

One reason a wealth gap exists between renters and homeowners is because when you’re a homeowner, your equity grows as your home appreciates in value and you make your mortgage payment each month. When you own a home, your monthly mortgage payment acts like a form of forced savings, which eventually pays off when you decide to sell. As a renter, you’ll never see a financial return on the money you pay out in rent every month. Ksenia Potapov, Economist at First Americanexplains it like this:

Renters don’t capture the wealth generated by house price appreciation, nor do they benefit from the equity gains generated by monthly mortgage payments . ..


The Largest Part of Most Homeowner Net Worth Is Their Equity

Home equity does more to build the average household’s wealth than anything else. According to data from First American and the Federal Reserve, this holds true across different income levels (see graph below):

The green segment in each bar represents how much of a homeowner's net worth comes from their home equity. Based on this data, it's clear no matter what your income level is, owning a home can really boost your wealth. Nicole Bachaud, Senior Economist at Zillow, shares:

“The biggest asset most people are ever going to own is a home. Homeownership is really that financial key that helps unlock stability and wealth preservation across generations.”

If you’re ready to start building your net worth, the current real estate market offers

several opportunities you should consider. For example, with mortgage

rates trending lower lately, your purchasing power may be higher now than it has

been in months. And, with more inventory coming to the market, there are more

options for you to consider. A local real estate agent can walk you through the

opportunities you have today and guide you through the process of finding your

ideal home.

Bottom Line:

If you're unsure about whether to rent or buy a home, keep in mind that owning a

home can increase your overall wealth in the long run, no matter your income. To

discover more about this and the many other benefits of homeownership, let’s


Let's now break down the numbers here

in the Front Range Colorado!

Check the Market Trend Stats for Each City

Latest Mortgage Rates

Rates are provided by Jana Fay-Barker of First National Bank of Omaha

Tailored Real Estate Solutions

Tailored to cater to your unique real estate needs, our collection of e-Guides empowers you with the knowledge and confidence to make informed decisions. Whether you're buying, selling, moving in winter, or relocating to Northern Colorado, these guides are your go-to resources for a successful and rewarding real estate experience.

*(Click the images below to get the e-guides)

Want more information on the Market?

Whether you are buying, selling, or just daydreaming about a new home, I can help you make an informed decision.

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Wayne Kohl

- In real estate since: 1996 - In Northern Colorado: 27 years - Education: Degrees in Business management and Finance - Designation’s: CRS, ABR CNE, SRS, SFR, CNE - Special services: Buyers, sel....

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