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Homeownership Is a Key to Building Wealth

Homeownership Is a Key to Building Wealth | Simplifying The Market

For years, real estate has been considered the best investment you can make. A major reason for this is due to the net worth a household gains through homeownership. In fact, according to the 2019 Survey of Consumer Finance Data from the Federal Reserve, for the average homeowner:

“…a primary home accounts for 90% of the total wealth of a family in the U.S.”

How do homeowners gain wealth?

Most large purchases, like cars and appliances, depreciate in value as they age, so it’s understandable to question how owning a home can increase wealth over time. In a simple equation, the National Association of Realtors (NAR) explains how the combination of paying your mortgage and home price appreciation grow overall wealth:

Principal Payments + Price Appreciation Gains = Housing Wealth Gain

As home values increase and you make payments toward your home loan, you’ll gain wealth through equity. The same article from NAR also addresses how wealth gains tend to play out over time:

“Housing wealth accumulation takes time and is built up by paying off the mortgage debt and by price appreciation. And while home prices can fall, home prices tend to recover and go up over the longer term. As of September 2020, the median sales price of existing home sales was $311,800, a 35% gain since July 2006 when prices peaked at $230,000.”

Taking a look at how equity has grown for the typical homeowner, it’s clear to see how real estate is a sound long-term investment. NAR notes:

“Nationally, a person who purchased a typical home 30 years ago would have typically gained about $283,000 as of the second quarter of 2020.” (See graph below):

Homeownership Is a Key to Building Wealth | Simplifying The Market

Bottom Line

Whether you’re a current homeowner planning to put your equity toward a new home or have hopes of buying your first home soon, homeownership will always be a great opportunity to build your net worth and overall wealth. Owning a home is truly an investment in your financial future.

Posted in: For Buyers, For Sellers, Pricing, Rent vs. Buy

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Albuquerque Area Zip Codes We Serve

  • 87001 Algodones
  • 87002 Belen
  • 87004 Bernalillo
  • 87008 Cedar Crest
  • 87015 Edgewood
  • 87016 Estancia
  • 87031 Los Lunas
  • 87035 Moriarty
  • 87042 Peralta
  • 87047 Sandia Park
  • 87048 Corrales
  • 87059 Tijeras
  • 87068 Bosque Farms
  • 87102 Albuquerque
  • 87104 Albuquerque
  • 87105 Albuquerque
  • 87106 Albuquerque
  • 87107 Albuquerque
  • 87108 Albuquerque
  • 87109 Albuquerque
  • 87110 Albuquerque
  • 87111 Albuquerque
  • 87112 Albuquerque
  • 87113 Albuquerque
  • 87114 Albuquerque
  • 87120 Albuquerque
  • 87121 Albuquerque
  • 87122 Albuquerque
  • 87123 Albuquerque
  • 87124 Rio Rancho
  • 87144 Rio Rancho
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    Venturi Realty Group - Keller Williams Realty

    1119 Alameda Blvd NW Albuquerque, NM 87114

    (505) 448 8888
    info@welcomehomeabq.com

    KW Main Office Location

    6703 Academy Blvd NE Albuquerque NM, 87109

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