How homeownership builds wealth
As a realtor, my objective is to help people reach their real estate goals – buy your first home, move up, downsize or invest in real estate. However, working in the field, I realize the opportunities to do this are not equal. And, those who know me, know that helping raise the tide that "floats all boats" is an ongoing quest of mine.
Those of us who own homes know that homeownership is a unique tool for building wealth in our economy— one that must be made accessible to more people if we hope to increase the financial security of all, especially low and middle income. While the cost burden to provide opportunities for affordable homeownership will fall on taxpayers initially (since tax incentives are the key to developers building “affordable” housing), the long- term result is financial stability with the ability of new homeowners to contribute to the economy rather than weigh on it.
Here’s an example of the difference homeownership can make…A young family has just enough cash saved to make the down payment and get a mortgage. As they build equity in their home, they can borrow against that wealth to weather financial emergencies (a job loss, car breakdown, medical crisis, etc.) or send a child to college.
Nearby, another young family can’t quite afford the down payment on a home. They’re stuck paying rent—not building any wealth–always playing catch up. When they’re hit with a financial emergency, it devastates the family’s finances, with no accumulated wealth to use to ride out the crisis, not to mention the opportunity to pay for college and help their own child to life of wealth-building.
It’s a very simple example, but it can affect generations. In 2016 the average net worth of a family who owned their own home stood at $231,400. Yet, a renter had a net worth of just $5,200. That's nearly a 45-fold difference. The significance is even greater for people of color.
Not everyone can nor should own a home. But the opportunities should be available to those who are willing to be educated about, and accept the responsibilities of homeownership. That’s where I can help - starting with education. If you know who is tired of renting and ready to build wealth, contact me.