It's often stated that for many Americans a majority of their net worth is in the equity that has have grown in their primary residence!
While of course that component of wealth took a major hit from the 2008 financial crisis slowly, along with rising home values, some portion of that wealth has come back.
Recently an article here examined the fact that renters are being forced to pay a growing percentage of monthly income for housing ('Percentage Of Income Going To Pay Rent At An All-Time High! (Chart)').
A logical extension of that discussion would therefore be the wide disparity in the accumulation of net worth by owners of their homes versus the renters of theirs.
The National Association of Realtors (NAR) has provided evidence that the spread between the two can be staggering!
- In the past 15 years, the net worth of the typical homeowner has ranged between 31 and 46 times that of the net worth of the typical renter.
- Homeowner equity is a substantial component of homeowner wealth. The Federal Reserve’s Survey of Consumer Finances, conducted once every three years, provides a snapshot of family income and net worth along with basic demographic details and more detailed information on where families keep the wealth they have accumulated.
- The most recent survey, conducted in 2013, offers a picture of the situation as home and equity prices normalized for most household balance sheets.
- Data shows that median homeowners had nearly $200,000 in net worth or 36 times that of the median renter who had just over $5,000. The median value of owners’ homes was $170,000.
- Many households own a primary residence (65.2 percent). It is the most commonly held non-financial assets after vehicles (86.3 percent).
So do these statistics mean that everyone should be buying a home?
While NAR would certainly like that to be the case, the reality is that for everyone in search of housing it will come down to the individuals specific demographic and financial details that will tell the story!
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Article written by Michael Haltman, President of Hallmark Abstract Service in New York.
HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.
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