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.

Check out our Market areas pages to find Berthoud real estate for sale, Estes Park real estate for sale, Fort Collins real estate for sale, Greeley real estate for sale, Livermore real estate for sale, Loveland real estate for sale, Red Feather Lakes real estate for sale, Windsor real estate for sale, Wellington real estate for sale.,

About the Author: Fred Porter

Fred has lived in Northern Colorado for the past 30 years and has been a northern Colorado Realtor full time since 2013. In an effort to keep his clients informed he periodically writes articles about the market and economy. If you have questions please contact Fred at: fred@porterrestate.com

Leave A Comment

Find Your
Dream Home!

Search

Search
Mountain Homes!

Search Mountain

Search
Luxury Properties!

Search Luxury

Didn’t find it?

Sign up below and receive new listing alerts in your email daily

New Listing Alerts