There are many financial benefits to home ownership, but probably none more important than its ability to create family wealth.
How Housing Matters is a joint project of the Urban Land Institute and the MacArthur Foundation. It is an online resource on how home ownership contributes to individual and community success.
Their article, The First Rung on the Ladder to Economic Opportunity Is Housing, explains the importance of home ownership to a family’s financial health. In that article, they simply state:
“The ladder to economic success can stretch only so high without the asset-building power of home ownership.”
In a recent post, the National Association of Realtors’ (NAR) Outlook Blog revealed:
“Housing wealth contributes positively to the homeowner’s and children’s economic condition, because home equity can be tapped for expenditures such as investing in another property (which can generate rental income), home renovation (which further increases the home value), a child’s college education, emergency or major life events, or expenses in retirement…
Housing wealth (or net worth or equity) is built up over time via home price appreciation and the principal payments that the homeowner makes on the loan.”
Below is a graph showing the build-up of wealth over time:
Note, in each case, appreciation is greater than payments. NAR’s Chief Economist, Lawrence Yun, explained that even though home appreciation has slowed, homeowners continue building wealth:
“Homeowners in the majority of markets are continuing to enjoy price gains, even at a slower rate of growth. A typical homeowner accumulated $9,500 in wealth over just the past year.”
Later in life, this wealth is crucial…
Home ownership wealth is important to a family’s retirement plans. In a recent report from the Joint Center for Housing Studies at Harvard University, they revealed that a renter 65 years old or older has a net worth of $6,710. Meanwhile, a homeowner 65+ years old has a net worth of $319,200. That huge difference will allow for a dramatic upgrade in one’s lifestyle during your retirement years. Home ownership builds wealth. This, in turn, allows families to have more and better options when it comes to their children and their life in retirement. If home ownership is in your plans for 2019 visit us at hfamiami.com/homebuyers to learn about our
first-time home buyers’ mortgage, low interest rates and down payment assistance programs. Note, information in this post was derived from KCM.com.