Building one's wealth is the #1 financial benefit of buying a home. Homeownership is a critical step in creating financial stability, and building equity through monthly principal payments.
According to Odeta Kushi, Deputy Chief Economist at First American, “The wealth-building power of homeownership shows that home is not only where your heart is, but also where your wealth is… For the majority of households that transition into homeownership, the most recent data reinforces that housing is one of the biggest positive drivers of wealth creation.”
The Homeowner Equity Insights Report, by CoreLogic, revealed a surge in wealth created over the last twelve months through increased home equity. The report showed: that roughly 38% of all homes are mortgage-free, over the last year the average equity gain of mortgaged homes was $26,300, and that the current average equity of mortgaged homes is greater than $200,000. The report also showed a 16.9% increase in total homeowner equity over the past year.
Here’s a map that shows the equity gains by state:
Homeowners are not the only ones benefiting from an increase in new worth. Last year, The Rosen Consulting Group released a report explaining how an increase in one's net worth (what they call the "wealth effect") had a big effect on the economy.
“In economic literature, the wealth effect is a term used to describe the fact that individuals have a tendency to increase their spending habits when their actual or perceived wealth increases. For homeowners, the latent savings achieved by building equity in their home and the growth in home values over time both contribute to increased net worth. Through the wealth effect, this in turn translates to households having a greater ability and willingness to spend money across a wide range of other types of goods and services that spur business activity and provide a positive multiplier effect that creates jobs and income throughout the economy.”
Homeownership not only builds wealth through equity, it also creates a positive impact for homeowners and their communities. If you are looking to buy a home and start increasing your net worth, call a #1 Properties real estate agent today!