Are you facing the dilemma of whether to rent or buy a home in Henderson or Las Vegas, Nevada? Let’s explore a key factor that can bolster your confidence in making the right decision for your future. Every three years, the Federal Reserve Board publishes the Survey of Consumer Finances (SCF), shedding light on the contrasting net worth of homeowners and renters. And the results are nothing short of astounding.

The average homeowner’s net worth stands at nearly 40 times that of a renter’s. You don’t need to take our word for it; the data speaks for itself (see the graph below):

Why Homeowner Net Worth Is Soaring

In the previous SCF report, the average homeowner’s net worth was approximately $255,000, while that of the average renter was a modest $6,300. In the most recent release, the gap between the two widened significantly, as homeowner net worth experienced a remarkable surge. As the Survey of Consumer Finances (SCF) report points out:

“The 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record.”

One of the primary drivers behind this surge in homeowner net worth is home equity.

Over the past few years, often referred to as the ‘unicorn’ years for the housing market, home prices skyrocketed. This phenomenon was the result of a shortage of available homes for sale and a surge in buyers taking advantage of historically low mortgage rates. The imbalance between supply and demand drove prices to new heights. Consequently, most homeowners who owned a home during that period witnessed a substantial growth in their equity.

If you’re still in the process of deciding whether to rent or buy, you might be wondering if you missed out on the opportunity to boost your net worth. Here’s what you need to understand: as a recent article in The Ascent highlights:

“Whether your net worth increased in recent years or not, there are steps you can take to boost that number in the coming years… buying a home can be a great way to grow your net worth, since home values have a tendency to rise over time.”

Historically, home prices appreciate over time, and even now, with mortgage rates inching up to 7-8%, prices continue to rise in many areas, primarily due to the persistent supply-demand imbalance. Expert forecasts for the next few years anticipate ongoing appreciation, albeit at a more typical pace for the housing market.

While it might not match the record-breaking surge of the past few years, those who purchase homes today are poised to continue building equity in the years ahead. In essence, if you’re ready and able to buy a home today, you’re making an investment that will contribute to the growth of your net worth in the long run.

In the words of Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR):

“…when deciding to rent vs. buy, one must calculate the total cost of homeownership (maintenance, utilities, commuting, etc.) and the total financial benefit. Based on new Fed data… the median net worth of homeowners was $396,200 vs. renters at $10,400. There is no question about the wealth gains that homeownership provides.”

In Conclusion

If you’re still undecided about renting or buying a home, remember that homeownership can significantly enhance your net worth over time. To delve deeper into this or explore the myriad other advantages of owning a home in Henderson or Las Vegas, Nevada, connect with a local real estate agent who understands the local market and can guide you towards a sound investment. Your path to financial prosperity begins with the right real estate partner.