Renting vs Owning: How Homeownership Impacts Your Wealth

Even in today’s tricky economic climate, owning a home remains one of the most reliable ways to grow your wealth. In fact, the difference between owning and renting is becoming more noticeable than ever.

According to the most recent data from the Federal Reserve, the typical U.S. homeowner now has a net worth of $430,000. Meanwhile, the average renter has just $10,000. That means homeowners are, on average, 43 times wealthier than renters.

Much of that wealth comes from home equity, which has grown significantly over the past five years. Realtor.com’s Hannah Jones says many homeowners were able to benefit from rising property values, using that equity to upgrade or invest further in real estate. Renters, unfortunately, have not had the same opportunity to build wealth in this way.

So what does this mean for renters who still dream of owning a home?

The good news is that the desire to own a home hasn’t gone away. A recent survey by the New York Federal Reserve found that more than 70% of renters would prefer to own, while fewer than 15% said they’d rather rent. People are still chasing the dream—they’re just running into some real financial hurdles.

High home prices, interest rates in the 6% range, and slow homebuilding activity have made it harder for many to break into the market. But change is on the horizon. Economists expect existing home sales to increase by 6% this year and 11% next year, thanks to strong buyer demand and possible rate cuts in the fall.

In short, homeownership could become more accessible again—and for renters who are watching the market, now is a smart time to start planning for that first big step.

How Renters Can Start Building Wealth Now: 

Even if buying isn’t in the cards just yet, renters can still prepare for future homeownership by building financial habits now. Without the extra expenses that come with owning, renters can take advantage of their flexibility to:

• Save aggressively toward a down payment

• Max out retirement accounts or employer matches

• Explore simple investment strategies to grow wealth over time

And when the right home and the right opportunity do come along, they’ll be in a better position to make the leap.

If you’ve been thinking about buying, selling, or planning for the future, I’d love to help! Whether it’s finding your first home or exploring what’s possible in today’s market, I’m always just a call or email away.