Unlocking Wealth: The Rising Net Worth of Homeowners in Southern Maine

Dated: November 7 2023

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The Pitfalls of Selling Your House Without a Realtor in Maine

If you're at a crossroads, deciding whether to rent or buy a home in Southern Maine, consider a crucial data point that can empower your choice. The Federal Reserve Board's Survey of Consumer Finances (SCF), updated every three years, provides insights into the net worth of homeowners and renters. The revelation is quite remarkable, highlighting a substantial disparity between the two.

 

The average net worth of a homeowner is nearly 40 times greater than that of a renter. To illustrate this point, let's examine the data (see the graph below):

The average homeowner’s net worth is almost 40X greater than a renter’s. And here’s the data to prove it (see graph below):

The Soaring Net Worth of Homeowners:

In the latest SCF report, the net worth of the average homeowner has witnessed a significant surge, eclipsing the net worth of the average renter. The report states:

". . . the 2019-2022 growth in median net worth was the largest three-year increase over the history of the modern SCF, more than double the next-largest one on record."

 

One of the primary catalysts for this meteoric rise in homeowner net worth is the accumulation of home equity.

 

In recent years, characterized as 'unicorn' years for the housing market, home prices experienced unprecedented growth. The imbalance between housing supply and a surge in buyer demand, coupled with historically low mortgage rates, propelled prices to new heights. Consequently, most homeowners who owned property during this period saw their equity expand significantly.

 

If you're currently weighing the decision to rent or buy, you may wonder if you missed out on the substantial net worth increase. However, it's important to note that, as The Ascent explains:

"Whether your net worth increased in recent years or not, there are steps you can take to boost that number in the coming years. . . buying a home can be a great way to grow your net worth since home values have a tendency to rise over time."

 

Historically, home prices tend to appreciate over time. Even as mortgage rates have edged higher, many areas in the country continue to experience price growth due to the persistent gap between supply and demand. Expert forecasts for the next few years indicate ongoing appreciation, though at a pace more typical of the housing market.

 

Therefore, individuals who choose to buy a home today can anticipate their equity to continue growing in the years ahead. This means that if you're ready and capable of purchasing a home in Southern Maine, you'll be making an investment that can significantly enhance your net worth in the long run.

 

Jessica Lautz, Deputy Chief Economist at the National Association of Realtors (NAR), emphasizes:

". . . when deciding to rent vs. buy, one must calculate the total cost of homeownership (maintenance, utilities, commuting, etc.) and the total financial benefit. Based on new Fed data . . . the median net worth of homeowners was $396,200 vs renters at $10,400. There is no question about the wealth gains that homeownership provides."

 

Conclusion:

If you find yourself torn between renting and buying a home, remember that homeownership can substantially boost your net worth over time. To delve deeper into this topic and explore the myriad advantages of owning a home in Southern Maine, let's connect. Your path to financial prosperity may be closer than you think.


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