While financial security is a goal for many, there seems to be a growing imbalance regarding security through homeownership. In this article, Andrew Shader notes a growing disparity between homeowners and renters.
Based on recent surveys, it is clear that individual net worth correlates with homeownership. The value of financial security cannot be understated, and owning a home can help lead people to this goal. According to Andrew Shader, a real estate developer specializing in value-added properties, owning a home should be a goal for everyone serious about building their net worth.
Why is homeownership such an important factor in building wealth? Many individuals struggle to set money aside in savings every month, leading to a lower net worth and no financial “parachute” or safeguard. But when you own a home, your monthly mortgage payment essentially forces you to save more money.
While that money is not in liquid funds, you should receive the money back that you invested when you sell or refinance the property. Most homes appreciate over time, making it more likely that your investment will yield returns later on down the road.
On the other hand, renters do not contribute toward anything meaningful with their rent payments each month. They are spending the same amount as homeowners without reaping any benefits down the line. Instead, their monthly payment serves only to line the pockets of their landlord or leasing agency.
The difference in net worth between the homeowner and renter is staggering. According to the Survey of Consumer Finances by the Federal Reserve, homeowners have an average net worth of $254,900 while renters have a meager $6,270.
A homeowner contributes money to their savings account every month as they are able. However, they are also busy building equity in their property. This makes a significant difference in the net worth between homeowners and renters. It is the primary reason why Andrew Shader believes that the disparity in net worth between homeowners and renters will continue to grow unless more renters take the first steps toward owning property.
Renters who are on the fence about purchasing a home should consider making a move soon. Interest rates are still lower than ever, increasing the number of houses the average person can afford. Owning a home lays the foundation for building solid net worth and sets the stage for a greater degree of financial security.
Homeownership goes hand-in-hand with the growth of net worth in the individual and family. The difference in financial security between renters and homeowners will only continue to grow until more people take the first steps to purchase their own homes in the years to come.
About Andrew Shader
Andrew Shader is an entrepreneur and a successful real estate developer and investor in Fort Lauderdale, Florida. He got his Business Management and Marketing degree from Florida State University. After spending years in the insurance industry, Mr. Shader decided to shift his focus to real estate. Andrew specializes in value-added properties and boosting property value through investment.